The Department has taxed my housing project income as business profit. Can I claim the section 80-IB(10) deduction now, in appeal, when I never claimed it in my return?
Not for years governed by section 80AC. The Madras High Court held that where section 80AC applies, the deduction cannot be allowed unless the return was filed by the due date and the claim was made in it. The assessee had made no claim under section 80-IB in its return, so for assessment years 2007-08 to 2011-12 the benefit was refused, section 80AC having been inserted by the Finance Act 2006 with effect from 1 April 2006. For assessment year 2006-07 the question was answered in the assessee's favour. The Court recorded a prima facie view that the requirement may be directory, but held it could say so only under Article 226 and not in a section 260A appeal.
Decided by the High Court (High Court of Judicature at Madras; R. Suresh Kumar and C. Saravanan JJ. Common judgment delivered by Saravanan J) on 2025-05-09, reported as T.C.A. Nos. 294 to 299 of 2018 and T.C.A. Nos. 355, 356, 378, 389, 390, 393, 396, 401, 402, 409 and 411 of 2021, Madras High Court, reserved 21 October 2024 and pronounced 9 May 2025. It bears on section 80AC, section 80-IB(10), section 139(1), section 260A, section 2(47)(v) of the Income Tax Act 1961, in Deductions & Disallowances, Appeals, Capital Gains and How Tax Law Is Read matters.
Two things make this judgment worth having. The first is the hard edge it puts on section 80AC: the entitlement to a Chapter VI-A deduction of the specified kind is conditioned on a timely return carrying the claim, and a court hearing a tax appeal cannot read that condition down, however deserving the claim. It applies Rowlatt J's rule in Cape Brandy that in a taxing Act one looks merely at what is clearly said, with nothing implied and nothing read in. The second is procedural and often missed: the Court held that the limited jurisdiction under section 260A does not permit a declaration that a statutory requirement is directory, that only the writ jurisdiction under Article 226 can do that, and it gave express liberty to mount that challenge in collateral proceedings and to revive these appeals if it succeeds. It also confirms, on the merits of section 80-IB(10), that the deduction is oriented towards the project and not towards ownership of the land, following Sanghvi and Doshi Enterprise and Radhe Developers.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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On 23 November 2005 the assessee company signed a joint venture development agreement and an agreement for sale with M/s Doshi Housing, a partnership firm. It was to transfer a proportionate share in its land to the developer and, in return, was entitled to sell 37.54 per cent of the built-up area. The son of the assessee's managing director was introduced as a partner in the developer firm, and part of the consideration for the transfer was paid directly to him, which the assessee's returns did not reflect: the capital gain returned was confined to the indexed value of the land computed on guideline value, the difference between market value and guideline value going to the son. A survey under section 133A was carried out in 2012, and in a statement recorded on 24 January 2012 the managing director confirmed that part of the profit share had gone to his son as consideration. Assessments were then made under section 143(3) read with section 147 on 14 May 2012, 14 June 2012 and 15 June 2012 for assessment years 2006-07 to 2010-11. The Commissioner (Appeals), by order of 28 August 2013, held the agreements effective from 23 November 2005, so that capital gains on 37.54 per cent of the saleable area arose from assessment year 2006-07, upheld the assessments, but deleted the protective assessments for 2007-08 and 2008-09 since the sale proceeds began reaching the assessee only from 2009-10; he also reduced the penalty under section 271(1)(c) from 300 per cent to 100 per cent. The Tribunal decided the cross appeals by common order of 4 March 2016. Before the High Court the assessee said it would be satisfied if one question were decided, and the Court re-framed the sole substantial question as whether the assessee was entitled to the benefit of section 80-IB(10) in the absence of a claim under section 80AC in the return filed under section 139.
The question was answered in the assessee's favour for assessment year 2006-07, and against it for assessment years 2007-08 to 2011-12, for the present and subject to a valid challenge to section 80AC. No deduction under section 80-IB had been claimed in the return filed under section 139(1). Section 80AC makes it expressly clear that the benefit cannot be allowed if no return was filed before the due date specified, and that express requirement cannot be read down in a statutory appeal, even though the assessee would otherwise have been entitled to the deduction. The scope of section 260A being limited, the Court does not have powers akin to those of the Supreme Court under Article 142. The decisions relied on by the assessee, including Goetze (India) Ltd, did not deal with a failure to make the claim in the return where section 80AC applies, and Sanghvi and Doshi Enterprise, though affirmed by the Supreme Court, was a case where the claim had been made in the return. The Court recorded its prima facie view that making the claim in the return is procedural and that the restriction inserted by the Finance Act 2006 with effect from 1 April 2006 is directory rather than mandatory, but held that such a declaration can be made only under Article 226 and not under section 260A, and expressly left that question to be decided independently if raised. T.C.A. No. 294 of 2018 was allowed; T.C.A. Nos. 295 to 299 of 2018 were dismissed for statistical purposes; the Department's appeals were allowed for statistical purposes; and liberty was given to revive them if the assessee succeeds in a collateral proceeding for a declaration that section 80AC is directory. No costs.
On the substance of section 80-IB(10) the Court accepted the line of authority that the deduction is oriented towards the project and not towards the assessee's ownership of the land, quoting its own earlier decision that a bare reading of the section shows the deduction is project-oriented, and the Gujarat High Court in Radhe Developers, which held that the provision nowhere requires that only developers owning the land may claim it; that view was affirmed by the Supreme Court in Sanghvi and Doshi Enterprise. But it noted that in Sanghvi and Doshi the claim had been made in the return filed under section 139. From assessment year 2007-08 the position was governed by section 80AC, and the Court applied the rule of construction in Cape Brandy v Inland Revenue Commissioners, that in a taxing Act one looks merely at what is clearly said, there being no room for intendment, no equity about a tax and no presumption, nothing to be read in and nothing implied, a rule followed by the Supreme Court in many tax cases. Read that way, section 80AC withholds the deduction where the return was not filed within the due date, and the omission to claim in the return cannot be excused by a court exercising the limited appellate jurisdiction under section 260A. Goetze (India), which allows a claim to be entertained by the appellate authorities though not made in the return, could not be extended to a case where section 80AC applies. The Court was careful not to shut the door: it said in terms that its prima facie view was that the requirement is procedural and directory, but that only the writ jurisdiction can so declare, and it framed its disposal so that the appeals can be revived if that declaration is obtained.
Section 80AC of the IT Act makes it expressly clear that the benefit of the aforesaid provision cannot be allowed if no Return of Income was filed before the due date
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Handle my notice → Ask a CA on WhatsAppNot for years governed by section 80AC. The Madras High Court held that where section 80AC applies, the deduction cannot be allowed unless the return was filed by the due date and the claim was made in it. The assessee had made no claim under section 80-IB in its return, so for assessment years 2007-08 to 2011-12 the benefit was refused, section 80AC having been inserted by the Finance Act 2006 with effect from 1 April 2006. For assessment year 2006-07 the question was answered in the assessee's favour. The Court recorded a prima facie view that the requirement may be directory, but held it could say so only under Article 226 and not in a section 260A appeal. This was decided by the High Court (High Court of Judicature at Madras; R. Suresh Kumar and C. Saravanan JJ. Common judgment delivered by Saravanan J) and bears on section 80AC, section 80-IB(10), section 139(1), section 260A, section 2(47)(v) of the Income Tax Act 1961. It is reported as T.C.A. Nos. 294 to 299 of 2018 and T.C.A. Nos. 355, 356, 378, 389, 390, 393, 396, 401, 402, 409 and 411 of 2021, Madras High Court, reserved 21 October 2024 and pronounced 9 May 2025. Two things make this judgment worth having. The first is the hard edge it puts on section 80AC: the entitlement to a Chapter VI-A deduction of the specified kind is conditioned on a timely return carrying the claim, and a court hearing a tax appeal cannot read that condition down, however deserving the claim. It applies Rowlatt J's rule in Cape Brandy that in a taxing Act one looks merely at what is clearly said, with nothing implied and nothing read in. The second is procedural and often missed: the Court held that the limited jurisdiction under section 260A does not permit a declaration that a statutory requirement is directory, that only the writ jurisdiction under Article 226 can do that, and it gave express liberty to mount that challenge in collateral proceedings and to revive these appeals if it succeeds. It also confirms, on the merits of section 80-IB(10), that the deduction is oriented towards the project and not towards ownership of the land, following Sanghvi and Doshi Enterprise and Radhe Developers. If it applies to you, the first step is this: Make the claim in the return itself and file the return by the due date wherever section 80AC lists the deduction; nothing later cures the omission in an appeal.
On 23 November 2005 the assessee company signed a joint venture development agreement and an agreement for sale with M/s Doshi Housing, a partnership firm. It was to transfer a proportionate share in its land to the developer and, in return, was entitled to sell 37.54 per cent of the built-up area. The son of the assessee's managing director was introduced as a partner in the developer firm, and part of the consideration for the transfer was paid directly to him, which the assessee's returns did not reflect: the capital gain returned was confined to the indexed value of the land computed on guideline value, the difference between market value and guideline value going to the son. A survey under section 133A was carried out in 2012, and in a statement recorded on 24 January 2012 the managing director confirmed that part of the profit share had gone to his son as consideration. Assessments were then made under section 143(3) read with section 147 on 14 May 2012, 14 June 2012 and 15 June 2012 for assessment years 2006-07 to 2010-11. The Commissioner (Appeals), by order of 28 August 2013, held the agreements effective from 23 November 2005, so that capital gains on 37.54 per cent of the saleable area arose from assessment year 2006-07, upheld the assessments, but deleted the protective assessments for 2007-08 and 2008-09 since the sale proceeds began reaching the assessee only from 2009-10; he also reduced the penalty under section 271(1)(c) from 300 per cent to 100 per cent. The Tribunal decided the cross appeals by common order of 4 March 2016. Before the High Court the assessee said it would be satisfied if one question were decided, and the Court re-framed the sole substantial question as whether the assessee was entitled to the benefit of section 80-IB(10) in the absence of a claim under section 80AC in the return filed under section 139. The matter was decided on 2025-05-09 by the High Court (High Court of Judicature at Madras; R. Suresh Kumar and C. Saravanan JJ. Common judgment delivered by Saravanan J). On those facts the High Court held as follows. The question was answered in the assessee's favour for assessment year 2006-07, and against it for assessment years 2007-08 to 2011-12, for the present and subject to a valid challenge to section 80AC. No deduction under section 80-IB had been claimed in the return filed under section 139(1). Section 80AC makes it expressly clear that the benefit cannot be allowed if no return was filed before the due date specified, and that express requirement cannot be read down in a statutory appeal, even though the assessee would otherwise have been entitled to the deduction. The scope of section 260A being limited, the Court does not have powers akin to those of the Supreme Court under Article 142. The decisions relied on by the assessee, including Goetze (India) Ltd, did not deal with a failure to make the claim in the return where section 80AC applies, and Sanghvi and Doshi Enterprise, though affirmed by the Supreme Court, was a case where the claim had been made in the return. The Court recorded its prima facie view that making the claim in the return is procedural and that the restriction inserted by the Finance Act 2006 with effect from 1 April 2006 is directory rather than mandatory, but held that such a declaration can be made only under Article 226 and not under section 260A, and expressly left that question to be decided independently if raised. T.C.A. No. 294 of 2018 was allowed; T.C.A. Nos. 295 to 299 of 2018 were dismissed for statistical purposes; the Department's appeals were allowed for statistical purposes; and liberty was given to revive them if the assessee succeeds in a collateral proceeding for a declaration that section 80AC is directory. No costs.
On the substance of section 80-IB(10) the Court accepted the line of authority that the deduction is oriented towards the project and not towards the assessee's ownership of the land, quoting its own earlier decision that a bare reading of the section shows the deduction is project-oriented, and the Gujarat High Court in Radhe Developers, which held that the provision nowhere requires that only developers owning the land may claim it; that view was affirmed by the Supreme Court in Sanghvi and Doshi Enterprise. But it noted that in Sanghvi and Doshi the claim had been made in the return filed under section 139. From assessment year 2007-08 the position was governed by section 80AC, and the Court applied the rule of construction in Cape Brandy v Inland Revenue Commissioners, that in a taxing Act one looks merely at what is clearly said, there being no room for intendment, no equity about a tax and no presumption, nothing to be read in and nothing implied, a rule followed by the Supreme Court in many tax cases. Read that way, section 80AC withholds the deduction where the return was not filed within the due date, and the omission to claim in the return cannot be excused by a court exercising the limited appellate jurisdiction under section 260A. Goetze (India), which allows a claim to be entertained by the appellate authorities though not made in the return, could not be extended to a case where section 80AC applies. The Court was careful not to shut the door: it said in terms that its prima facie view was that the requirement is procedural and directory, but that only the writ jurisdiction can so declare, and it framed its disposal so that the appeals can be revived if that declaration is obtained. In the words reproduced by the source cited on this page: "Section 80AC of the IT Act makes it expressly clear that the benefit of the aforesaid provision cannot be allowed if no Return of Income was filed before the due date" The decision followed or applied Commissioner of Sales Tax v. Auriya Chambers of Commerce (1986) 3 SCC 50 / (1987) 167 ITR 458; Unichem Laboratories Ltd. v. CCE 2002 (145) E.L.T. 502 (SC); Formica India Division v. CCE 1995 Supp (3) SCC 552; CIT v. Sanghvi & Doshi Enterprise (2013) 255 CTR (Mad) 156; Goetze (India) Ltd. v. CIT (2006) 284 ITR 323.
It was decided by the High Court on 2025-05-09 and is reported as T.C.A. Nos. 294 to 299 of 2018 and T.C.A. Nos. 355, 356, 378, 389, 390, 393, 396, 401, 402, 409 and 411 of 2021, Madras High Court, reserved 21 October 2024 and pronounced 9 May 2025. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 80AC, section 80-IB(10), section 139(1), section 260A, section 2(47)(v), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The question was answered in the assessee's favour for assessment year 2006-07, and against it for assessment years 2007-08 to 2011-12, for the present and subject to a valid challenge to section 80AC. No deduction under section 80-IB had been claimed in the return filed under section 139(1). Section 80AC makes it expressly clear that the benefit cannot be allowed if no return was filed before the due date specified, and that express requirement cannot be read down in a statutory appeal, even though the assessee would otherwise have been entitled to the deduction. The scope of section 260A being limited, the Court does not have powers akin to those of the Supreme Court under Article 142. The decisions relied on by the assessee, including Goetze (India) Ltd, did not deal with a failure to make the claim in the return where section 80AC applies, and Sanghvi and Doshi Enterprise, though affirmed by the Supreme Court, was a case where the claim had been made in the return. The Court recorded its prima facie view that making the claim in the return is procedural and that the restriction inserted by the Finance Act 2006 with effect from 1 April 2006 is directory rather than mandatory, but held that such a declaration can be made only under Article 226 and not under section 260A, and expressly left that question to be decided independently if raised. T.C.A. No. 294 of 2018 was allowed; T.C.A. Nos. 295 to 299 of 2018 were dismissed for statistical purposes; the Department's appeals were allowed for statistical purposes; and liberty was given to revive them if the assessee succeeds in a collateral proceeding for a declaration that section 80AC is directory. No costs. It arises in Deductions & Disallowances, Appeals, Capital Gains and How Tax Law Is Read matters, on section 80AC, section 80-IB(10), section 139(1), section 260A, section 2(47)(v) of the Income Tax Act 1961, and was decided by High Court of Judicature at Madras; R. Suresh Kumar and C. Saravanan JJ. Common judgment delivered by Saravanan J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Do not rely on Goetze (India) as a route to a fresh claim before the appellate authorities where section 80AC applies; the Court held that decision cannot be extended to a case where no claim was made in the return. Check which assessment years are actually covered, since section 80AC came in with effect from 1 April 2006 and the Court answered in the assessee's favour for the year before it bit. If you want the requirement treated as directory, bring a writ petition under Article 226 rather than arguing it in the tax appeal, and ask for liberty to revive the appeal, as the Court gave here. On the substance of section 80-IB(10), do not concede on ownership of the land; the deduction is oriented towards the project, and a developer who is not the owner can qualify.
Still good law. A Division Bench judgment of 9 May 2025. The source page records no later citation of it, and whether it has been carried to the Supreme Court was not checked in this session. Its holding on section 80AC is expressly interim in one respect: the Court recorded a prima facie view that the requirement may be directory and gave liberty to seek that declaration under Article 226 and to revive these appeals, so the outcome between these parties may yet change. Section 80AC has since been widened to cover a longer list of deductions, and the current text should be read before the case is applied. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The library had carried a second page for this same judgment at /caselaw/case/coromondel-cabeles-v-acit-80ac-claim-must-be-in-the-return/; the two have been merged and that address now redirects here. The harvested page is marked as clipped and about 41,600 characters from the middle of a sixty-five page judgment are not reproduced. What is missing is the greater part of the Court's discussion, including its treatment of most of the seventy-odd authorities cited and its analysis of section 2(47)(v) and section 45(2); what survives is the cause title, the questions framed, the facts, the orders below, and the concluding analysis from the discussion of Sanghvi and Doshi Enterprise to the operative order. The record of the reasoning here is therefore built from the concluding portion. The Court decided only the re-framed question on section 80AC and section 80-IB(10); the three questions originally framed in the assessee's appeals, on the year of transfer under the joint development agreement, on section 45(2) and on the taxation of the project profit, and the ten questions raised by the Department, including those on section 2(47)(v) read with section 53A of the Transfer of Property Act, on the cost of improvement of Rs 68,99,590, and on the penalty under section 271(1)(c), were not separately answered, all the appeals being disposed of by reference to the single question. Paragraph 121 refers to a declaration under Article 266 of the Constitution where Article 226 is plainly meant. The judgment does not state the amounts of the additions or of the penalty finally in issue. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The question was answered in the assessee's favour for assessment year 2006-07, and against it for assessment years 2007-08 to 2011-12, for the present and subject to a valid challenge to section 80AC. No deduction under section 80-IB had been claimed in the return filed under section 139(1). Section 80AC makes it expressly clear that the benefit cannot be allowed if no return was filed before the due date specified, and that express requirement cannot be read down in a statutory appeal, even though the assessee would otherwise have been entitled to the deduction. The scope of section 260A being limited, the Court does not have powers akin to those of the Supreme Court under Article 142. The decisions relied on by the assessee, including Goetze (India) Ltd, did not deal with a failure to make the claim in the return where section 80AC applies, and Sanghvi and Doshi Enterprise, though affirmed by the Supreme Court, was a case where the claim had been made in the return. The Court recorded its prima facie view that making the claim in the return is procedural and that the restriction inserted by the Finance Act 2006 with effect from 1 April 2006 is directory rather than mandatory, but held that such a declaration can be made only under Article 226 and not under section 260A, and expressly left that question to be decided independently if raised. T.C.A. No. 294 of 2018 was allowed; T.C.A. Nos. 295 to 299 of 2018 were dismissed for statistical purposes; the Department's appeals were allowed for statistical purposes; and liberty was given to revive them if the assessee succeeds in a collateral proceeding for a declaration that section 80AC is directory. No costs.
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