IT deduction cannot be claimed during re-assessment if not claimed in original assessment proceedings

Last updated: 28 July 2021

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Quick Summary

The Karnataka High Court has ruled that GMR Infrastructure Ltd. cannot claim IT deductions during a re-assessment under Section 153A if these were not claimed in the original assessment. The court upheld the ITAT Bangalore's decision, which stated that re-assessments under Section 153A are not de novo proceedings. Therefore, new claims for expenditure not made in the completed original assessment cannot be introduced.

Court :
ITAT Bangalore

Brief :
In GMR Infrastructure Ltd. v. the Deputy Commissioner of Income Tax [ITA No. 1036 of 2017 decided on July 6, 2021] GMR Infrastructure Ltd. ("the Appellant") filed an appeal against order by ITAT, Bangalore w.r.t. to the issue that whether the Appellant is entitled to raise a fresh claim during the assessment proceeding under Section 153A of the Income Tax Act, 1961 ("IT Act") pursuant to search action under Section 132 of the IT Act.

Citation :
ITA No. 1036 of 2017 decided on July 6, 2021

In GMR Infrastructure Ltd. v. the Deputy Commissioner of Income Tax [ITA No. 1036 of 2017 decided on July 6, 2021] GMR Infrastructure Ltd. (“the Appellant”) filed an appeal against order by ITAT, Bangalore w.r.t. to the issue that whether the Appellant is entitled to raise a fresh claim during the assessment proceeding under Section 153A of the Income Tax Act, 1961 (“IT Act”) pursuant to search action under Section 132 of the IT Act.

ITAT, Bangalore- Relied on the decision of Rajasthan High Court in Jai Steels (India) Jodhpur c. ACIT [36 TAXMANN.COM 523] to hold that the assessment or re-assessment made in pursuance to Section 153A of the IT Act, is not a de novo assessment and therefore, it was not open to the Appellant to claim and be allowed deduction or allowance of expenditure which it had not claimed in the original assessment proceedings which in the case of the Appellant stood completed.

Hon'ble Karnataka High Court upheld the decision of ITAT, Bangalore and dismissed the appeal.

FAQ :

No, generally you cannot claim an IT deduction during a re-assessment (under Section 153A) if it was not claimed in the original assessment proceedings, as these are not considered de novo assessments.

Section 153A deals with the assessment or re-assessment of income in cases where a search action under Section 132 of the IT Act has taken place.

'De novo assessment' means a completely new assessment from the beginning. The ruling indicates that Section 153A assessments are not treated this way.

The Hon'ble Karnataka High Court upheld the decision of ITAT, Bangalore, dismissing the appeal on this matter.

The main issue was whether GMR Infrastructure Ltd. could raise a fresh claim for an IT deduction during re-assessment proceedings under Section 153A, which they had not claimed in their original assessment.