PRINCIPAL COMMISSIONER OF INCOME TAX-III, BANGALORE AND ANOTHERversusM/S WIPRO LIMITED

36                       [2022]
              SUPREME COURT     17 S.C.R. 36
                             REPORTS                       [2022] 17 S.C.R.


A          PRINCIPAL COMMISSIONER OF INCOME TAX-III,
                   BANGALORE AND ANOTHER
                                        v.
                            M/S WIPRO LIMITED
B                       (Civil Appeal No. 1449 of 2022)
                   (Arising out of SLP (Civil) No. 7620/2021)
                                 JULY 11, 2022
              [M. R. SHAH AND B. V. NAGARATHNA, JJ.]
C            Income Tax Act, 1961 – Ss. 10B, 10B (5), 10B (8), 72, 32 (1)
     (ii-a), 80, 139 (1), 139 (5) – Return of income u/S 139 (1) – Revised
     return –Denial of claim of carrying forward of losses –Respondent
     assessee filed return of income, declaring loss and claiming
     exemption u/S. 10 B of IT Act along with a note that no loss is being
     carried forward – Subsequently, assessee filed a declaration before
D
     Assessing Officer (AO) stating that it does not want to avail the
     benefit u/10 B as per S. 10 B (8) and thereafter filed a revised
     return of income wherein exemption u/10 B was not claimed and
     claim for carry forward of losses was made – AO rejected the
     withdrawal of exemption u/S. 10 B – Respondent Assessee filed
E    appeal before Commissioner of Income Tax (Appeals), which upheld
     the order passed by AO – Assessee filed appeal before ITAT, which
     ruled in favour of assessee, allowing the assessee’s claim for
     carrying forward of losses under Section 72 of the IT Act – Appellant
     revenue went in appeal before High Court, which dismissed the
     appeal –Whether, for claiming exemption under Section 10B (8) of
F
     the IT Act, the assessee is required to fulfil the twin conditions,
     namely, (i) furnishing a declaration to the assessing officer in writing
     that the provisions of Section 10B (8) may not be made applicable
     to him; and (ii) the said declaration to be furnished before the due
     date of filing the return of income under sub-section (1) of Section
G    139 of the IT Act – Held:For claiming the benefit under Section
     10B (8), the twin conditions of furnishing the declaration to the
     assessing officer in writing and that the same must be furnished
     before the due date of filing the return of income under sub-section
     (1) of section 139 of the IT Act are mandatory –A revised return of
     income, under Section 139(5) cannot be filed to withdraw the claim
H
                                       36
 PRINCIPAL COMMISSIONER OF INCOME TAX-III, BANGALORE                    37
                   v. M/S WIPRO LTD.

and subsequently claiming the carried forward or set-off of any         A
loss –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 – Also, if the claim is withdrawn post
the date of filing of return, the accountant’s report under section
10B (5) would become falsified and would stand to be nullified.
                                                                        B
      Interpretation of Statutes – Taxing Statutes/Provisions – In a
taxing statute the provisions are to be read as they are and they are
to be literally construed, more particularly in a case of exemption
sought by an assessee - Literal construction of interpretation to be
used in taxing statutes/provisions
                                                                        C
      Allowing the appeal, the Court
       HELD: 1.1 The wording of the Section 10B (8) is very clear
and unambiguous. For claiming the benefit under Section 10B
(8), the twin conditions of furnishing the declaration to the
assessing officer in writing and that the same must be furnished        D
before the due date of filing the return of income under sub-section
(1) of section 139 of the IT Act are required to be fulfilled and/or
satisfied. Both the conditions to be satisfied are mandatory. It
cannot be said that one of the conditions would be mandatory and
the other would be directory, where the words used for furnishing
the declaration to the assessing officer and to be furnished before     E
the due date of filing the original return of income under sub-
section (1) of section 139 are same/similar. It cannot be disputed
that in a taxing statute the provisions are to be read as they are
and they are to be literally construed, more particularly in a case
of exemption sought by an assessee. [Para 8][50-G-H; 51-A-B]            F
      1.2 Filing a revised return under section 139(5) of the IT
Act claiming carrying forward of losses subsequently would not
help the assessee. The revised return filed by the assessee under
section 139(5) can only substitute its original return under Section
139(1) and cannot transform it into a return under Section 139(3),      G
in order to avail the benefit of carrying forward or set-off of any
loss under Section 80 of the IT Act. The assessee can file a revised
return in a case where there is an omission or a wrong statement.
But a revised return of income, under Section 139(5) cannot be

                                                                        H
38            SUPREME COURT REPORTS                     [2022] 17 S.C.R.


A    filed, to withdraw the claim and subsequently claiming the carried
     forward or set-off of any loss. 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
B
     to substitute the original return of income filed under section
     139(1) of the IT Act. Claiming benefit under section 10B (8) and
     furnishing the declaration as required under section 10B (8) in
     the revised return of income which was much after the due date
     of filing the original return of income under section 139(1) of the
C    IT Act, cannot mean that the assessee has complied with the
     condition of furnishing the declaration before the due date of filing
     the original return of income under section 139(1) of the Act.
     [Para 9][51-B-F]
           1.3 The significance of filing a declaration under section
D    10B (8) can be said to be co-terminus with filing of a return under
     section 139(1), as a check has been put in place by virtue of section
     10B (5) to verify the correctness of claim of deduction at the
     time of filing the return. If an assessee claims an exemption under
     the Act by virtue of Section 10B, then the correctness of claim
     has already been verified under section 10B (5). Therefore, if
E    the claim is withdrawn post the date of filing of return, the
     accountant’s report under section 10B (5) would become falsified
     and would stand to be nullified. [Para 10][52-B-C]
           1.4 Section 10B (8) is an exemption provision which cannot
     be compared with claiming an additional depreciation under
F    section 32(1) (ii-a) of the Act. An assessee claiming exemption
     has to strictly and literally comply with the exemption provisions.
     Chapter III and Chapter VIA of the Act operate in different realms
     and principles of Chapter III, which deals with “incomes which
     do not form a part of total income”, cannot be equated with
G    mechanism provided for deductions in Chapter VIA, which deals
     with “deductions to be made in computing total income”. The
     exemption provisions are to be strictly and literally complied with
     and the same cannot be construed as procedural requirement.
     [Para 11 & 12][52-D-F, H]

H
 PRINCIPAL COMMISSIONER OF INCOME TAX-III, BANGALORE                  39
                   v. M/S WIPRO LTD.

      1.5 The High Court has committed a grave error in               A
observing and holding that the requirement of furnishing a
declaration under Section 10B (8) of the IT Act is mandatory, but
the time limit within which the declaration is to be filed is not
mandatory but is directory. The same is erroneous and contrary
to the unambiguous language contained in Section 10B (8) of the
                                                                      B
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. The orders passed
by the High Court as well as ITAT taking a contrary view are set
aside and it is held that the assessee shall not be entitled to the   C
benefit under Section 10B (8) of the IT Act on non-compliance of
the twin conditions as provided under Section 10B (8) of the IT
Act. [Para 14][53-C-F]
      Commissioner of Income Tax v. Andhra Cotton Mills
      Limited, [1996] 219 ITR 404 (AP); Commissioner of               D
      Income Tax-III v. Calcutta Knitwears, Ludhiana (2014)
      6 SCC 444 : [2014] 5 SCR 855; Commissioner of
      Customs (Import), Mumbai v. Dilip Kumar and Company
      and others [2018] 9 SCC 1 : [2018] 7 SCR 1191;
      Telangana State Pollution Board v. CBDT (Writ Petition
      No. 4834/2020, decided on 26.07.2021); CIT v.                   E
      Yokogawa India Ltd. [2017] 2 SCC 1 : (2016) 9 SCR
      163; Commissioner of Income Tax, Delhi-III, New Delhi
      v. Moser Baer India Limited, decided on 14.05.2008 in
      ITA No. 950/2007; – referred to.
      Commissioner of Income Tax v. Shivanand Electronics             F
      ((1994) 209 ITR 63); CIT v. Rana Polycot Ltd. 2011
      SCC OnLine P&H 17591; CIT v. Ramani Relators (P)
      Ltd., 2014 SCC OnLine Mad. 12717; – referred to.
      CIT, Maharashtra v. G.M. Knitting Industries Pvt. Ltd.
      (2016) 12 SCC 272– inapplicable.
                                                                      G
                       Case Law Reference
[2014] 5 SCR 855               referred to            Para 3.10
[2018] 7 SCR 1191              referred to            Para 3.10
[2016] 9 SCR 163               referred to            Para 4.11
[2016] 12 SCC 272             inapplicable            Para 4.6        H
40            SUPREME COURT REPORTS                          [2022] 17 S.C.R.


A          CIVIL APPELLATE JURISDICTION : Civil Appeal No.1449
     of 2022.
           From the Judgment and Order dated 30.11.2020 of the High Court
     of Karnataka at Bengaluru in I.T.A. No.462 of 2017.
           Balbir Singh, ASG, D. L. Chidananda, Adit Khorana, Ms. Swati
B    Ghildiyal, Shyam Gopal, Ms. Aakanksha Kaul, Ms. Preeti Rani, Udai
     Khanna, Ms. Monica Benjamin, Ms. Surbhi Singh, Raj Bahadur Yadav,
     Prahlad Singh, Advs. for the Appellants.
           S. Ganesh, Sr. Adv., Ms. Archana Sahadeva, Ms. Pragati Agrawal,
     Advs. for the Respondent.
C          The Judgment of the Court was delivered by
           M. R. SHAH, J.
           1. Feeling aggrieved and dissatisfied with the impugned judgment
     and order dated 30.11.2020 passed by the High Court of Karnataka at
     Bengaluru in Income Tax Appeal No. 462/2017, by which the High Court
D    has dismissed the said appeal preferred by the Revenue and has
     confirmed the judgment and order dated 25.11.2016 passed by the Income
     Tax Appellate Tribunal, Bangalore Bench ‘C’, Bangalore (for short,
     ‘ITAT’), allowing the assessee’s claim for carry forward of losses under
     Section 72 of the Income Tax Act, 1961 (for short, ‘IT Act’), the Revenue
E    has preferred the present appeal.
            2. The respondent-assessee is a 100% export-oriented unit and
     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
F    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. That thereafter, the assessee filed a
G    declaration dated 24.10.2002 before the Assessing Officer (AO) stating
     that the assessee does not want to avail 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
H    assessee claimed carry forward of losses.
 PRINCIPAL COMMISSIONER OF INCOME TAX-III, BANGALORE                          41
            v. M/S WIPRO LTD. [M. R. SHAH, J.]

       2.1 Assessing Officer passed an order dated 31.03.2004 rejecting       A
the withdrawal of exemption under Section 10B of the IT Act holding
that the assessee did not furnish the declaration in writing before the due
date of filing of return of income, which was 31.10.2001. Thereby, the
AO made the addition in respect of denial of claim of carrying forward
of losses under Section 72 of the IT Act.
                                                                              B
       2.2 Assessee filed an appeal before the Commissioner of Income
Tax (Appeals), New Delhi (for short, ‘CIT(A)’). By order dated
19.01.2009, the CIT(A) upheld the order passed by the Assessing Officer
making addition in respect of denial of claim of carrying forward of
losses under Section 72 of the IT Act.
                                                                              C
       2.3 Aggrieved by the order passed by the CIT(A), the assessee
filed an appeal before the ITAT. Vide order dated 25.11.2016, the ITAT
decided the issue in favour of the assessee stating that the declaration
requirement under Section 10B (8) of the IT Act was filed by the assessee
before the AO before the due date of filing of return of income as per
Section 139(1) of the IT Act. ITAT allowed the assessee’s claim for           D
carrying forward of losses under Section 72 of the IT Act.
       2.4 Feeling aggrieved and dissatisfied with the order passed by
the ITAT, allowing the assessee’s claim for carrying forward of losses
under Section 72 of the IT Act, the Revenue preferred an appeal before
the High Court. By the impugned judgment and order, the High Court            E
has dismissed the said appeal. Hence, the Revenue is before this Court
by way of present appeal.
       3. Shri Balbir Singh, learned Additional Solicitor General of India
appearing for the Revenue has vehemently contended that in the present
case, as the conditions mentioned in Section 10B (8) of the IT Act are        F
not complied with, inasmuch as the declaration was not filed before the
due date of filing of return, both, the ITAT and the High Court have
committed a grave error in allowing the assessee’s claim for carrying
forward of losses under Section 72 of the IT Act.
       3.1 It is submitted that in the present case, the original return of   G
income was filed on 31.10.2001, which was the due date for filing return
of income. The assessee filed a declaration on 24.10.2002 before the
AO stating that the assessee does not want to avail the benefit under
Section 10B of the IT Act for A.Y. 2001-02. That thereafter the assessee
filed the revised return of income on 23.12.2002 claiming carry forward
                                                                              H
42             SUPREME COURT REPORTS                           [2022] 17 S.C.R.


A    of losses under Section 72 of the IT Act. It is submitted that therefore as
     the declaration required under Section 10B (8) of the IT Act was filed
     beyond the due date of filing of return and hence the assessee was not
     entitled to carry forward of losses under Section 72 of the IT Act. It is
     submitted that in the present case, the ITAT has wrongly noted that the
     declaration under Section 10B (8) of the IT Act was filed before the due
B
     date.
           3.2 It is further contended that the High Court has erred in
     observing that the requirement under Section 10B (8) of the IT Act is a
     procedural requirement.
C            3.3 It is submitted that the High Court has not properly appreciated
     the consequences of not filing the declaration within the time as required
     under Section 10B (5) and non-compliance of Sections 10B (5) and 10B
     (8) of the IT Act. It is submitted that if the view taken by the High Court
     is accepted, in that case, it shall nullify the provisions of Sections 10B (5)
     and 10B (8) of the IT Act.
D
             3.4 Shri Balbir Singh, learned ASG appearing on behalf of the
     Revenue further submitted that in the present case the assessee filed
     the revised return of income on 23.12.2002, wherein for the first time
     the assessee did not claim the exemption under Section 10B of the IT
     Act and claimed carrying forward of losses under Section 72 of the IT
E    Act. That such a claim could not have been made while submitting the
     revised return of income. That the revised return of income can be filed
     under Section 139(5) of the IT Act only to remove the omission and
     mistake and/or correct the arithmetical error. It is submitted that the
     revised return of income under Section 139(5) of the IT Act cannot be
F    filed for altogether a new claim. Reliance is placed on the decision of
     the Andhra Pradesh High Court in the case of Commissioner of Income
     Tax v. Andhra Cotton Mills Limited, [1996] 219 ITR 404 (AP). That
     in the aforesaid decision, the Andhra Pradesh High Court has held that a
     revised return under Section 139(5) can be filed only if there is an omission
     or a wrong statement. That in the aforesaid case, the assessee in the
G    original return filed the P&L account containing provision for depreciation
     and did not opt for the option of not providing details regarding depreciation
     in its P&L account. Therefore, the High Court held that the intention of
     the assessee was to withdraw the claim for deduction of depreciation
     only to get a set-off and since particulars were furnished along with the
H
 PRINCIPAL COMMISSIONER OF INCOME TAX-III, BANGALORE                            43
            v. M/S WIPRO LTD. [M. R. SHAH, J.]

original return, the ITO was bound to allow the deduction of depreciation       A
in computing the income from business.
       3.5 It is submitted that in the present case while filing the original
return of income, the assessee specifically declared a loss of Rs.
15,47,76,990/- and claimed exemption under Section 10B of the IT Act.
That as per the note annexed to the computation of income, annexed              B
with the original return of income, the assessee specifically stated that
“the company is registered as 100% export-oriented unit and is entitled
to claim exemption under Section 10B of the IT Act. No loss is therefore
being carried forward.”
       3.6 It is submitted that as an afterthought the assessee filed a         C
declaration as required under Section 10B (5) belatedly and after the
due date mentioned in Section 10B (5) and claimed carry forward of
losses under Section 72 of the IT Act, withdrawing its claim for deduction
under Section 10B of the IT Act. It is contended that the High Court has
not properly appreciated the fact that by filing a declaration subsequently
and filing the revised return of income, the intent of the assessee was to      D
frustrate the purpose of Section 10B of the IT Act and file a declaration
under Section 10B (8) belatedly. It is submitted that the High Court has
not properly appreciated the fact that the assessee’s intention to file the
revised return was only as an afterthought and with the intention to
extend the period of filing the declaration beyond the period specified in      E
Section 10B (8) of the IT Act.
         3.7 It is further submitted by learned ASG appearing on behalf of
the Revenue that the High Court has seriously erred in observing that
the requirement of submission of declaration under Section 10B (8) is
mandatory in nature, but the time limit within which the declaration is to      F
be filed is directory in nature, as the provision does not provide for any
adverse consequence for not filing of the declaration by the time limit. It
is submitted that the High Court has not properly appreciated and/or
considered the fact that non-filing of declaration before the due date,
i.e., filing of the return of income would result in denial of the benefit
under Section 10B (8) of the IT Act. Therefore, it cannot be said that          G
there is no consequence of not filing of declaration before the due date
of return of income.
      3.8 It is contended that the High Court has materially erred in
following and relying upon the decision of the Delhi High Court in the
                                                                                H
44             SUPREME COURT REPORTS                           [2022] 17 S.C.R.


A    case of Commissioner of Income Tax, Delhi-III, New Delhi v. Moser
     Baer India Limited, decided on 14.05.2008 in ITA No. 950/2007,
     wherein it was considering the requirement of Section 10B (7) of the IT
     Act.
            3.9 It is next contended that there is a clear distinction between
B    the provisions seeking exemption and the provisions for deduction. That
     Chapter III of the IT Act deals with exemptions. However, Chapter
     VIA deals with deductions. That Section 10B of the IT Act is an exemption
     provision and the condition for seeking an exemption is required to be
     complied with strictly with the provision.
C            3.10 Learned ASG submitted that as held by this Court in a catena
     of cases that a taxing statute should be strictly construed and that the
     machinery provisions must be so construed to effectuate the object and
     purpose of statute and that the exemption provisions must be construed
     strictly and by a strict interpretation. Reliance is placed on the judgments
     of this Court in the case of Commissioner of Income Tax-III v.
D    Calcutta Knitwears, Ludhiana (2014) 6 SCC 444 and Commissioner
     of Customs (Import), Mumbai v. Dilip Kumar and Company and
     others (2018) 9 SCC 1.
           Making the above submissions and relying upon the aforesaid
     decisions, it is prayed to allow the present appeal.
E
           4. The present appeal is vehemently opposed by Shri S. Ganesh,
     learned Senior Advocate appearing on behalf of the respondent –
     assessee.
             4.1 Learned counsel appearing on behalf of the assessee has
F    submitted that the only question of law which arises in the present case
     is with regard to the interpretation of Section 10B (8) of the IT Act, viz.,
     whether the requirement of submission of the declaration before the last
     date for submission of the return is mandatory or directory. It is submitted
     that on a true interpretation of Sections 10B (5) and 10B (8) of the IT
     Act, the High Court has rightly observed and held that the requirement
G    of filing a declaration is mandatory in nature, while the time limit in filing
     the declaration is directory in nature. It is submitted that the High Court
     has rightly held the requirement of filing the declaration by the time limit
     directory as non-filing of the declaration within the time limit does not
     envisage any consequence. It is urged that the High Court has rightly
     relied upon the decision of the Delhi High Court in the case of Moser
H
 PRINCIPAL COMMISSIONER OF INCOME TAX-III, BANGALORE                            45
            v. M/S WIPRO LTD. [M. R. SHAH, J.]

Baer (supra). It is submitted that the issues of validity of the revised        A
return of income; whether the respondent was entitled to carry forward
its losses under Sections 10B and 80 of the IT Act; and whether the
assessee had duly complied with Section 80 and Section 10B (5) of the
IT Act were not raised before the High Court.
       4.2 It is submitted that apart from the above, even on merits also,      B
the Revenue has no case. This is because Section 80 of the IT Act only
requires that an assessee claiming carry forward of loss should file a
return showing the loss before the last date for submitting the return. It
is submitted that in the instant case the assessee filed the original return
in time declaring the loss and thereby complied with Section 80 of the IT
Act.                                                                            C

       4.3 It is further submitted that though it was not necessary for the
exercise of option under Section 10B (8) of the IT Act, the assessee
filed a revised return only to bring to the notice of the AO the factum of
exercise of option under Section 10B. Even if the revised return had not
been filed and instead, the assessee had submitted the declaration in           D
writing to the AO during the assessment proceedings, it would have
made no difference whatsoever to the exercise of option under Section
10B (8) of the IT Act. It is submitted that therefore the validity of the
revised return is wholly immaterial and irrelevant.
       4.4 It is further submitted that the accountant’s certificate under      E
Section 10B (5) is required only if the assessee claims the deduction
under Section 10B. This certificate only certifies the profit/loss of Section
10B unit and the amount of deduction under Section 10B (1), if any. The
certificate, if already submitted, becomes irrelevant if the claim is
withdrawn under Section 10B. In any event, the contents of this certificate     F
regarding profit/loss are not in any way affected by the withdrawal of
the Section 10B claim. It is submitted that in the present case, the loss
set out in Section 10B certificate remained exactly the same after
withdrawal of the claim made under Section 10B and the respondent
making the claim for carry forward of loss. It is submitted that there
was no claim for any deduction under Section 10B (1) at any time.               G
      4.5 It is submitted that the incontrovertible position set out in
paragraphs 4.2 to 4.4 above is the precise reason why these points were
not even attempted to be raised, either before the ITAT or before the
High Court, and are sought to be raised before this Court for the first
time and without disclosing the correct and complete facts.                     H
46             SUPREME COURT REPORTS                          [2022] 17 S.C.R.


A           4.6 It is further submitted by Shri S. Ganesh, learned counsel
     appearing on behalf of the assessee that on interpretation of Section
     10B (8) of the IT Act, the case is squarely covered by the judgment of
     this Court in the case of CIT, Maharashtra v. G.M. Knitting Industries
     Pvt. Ltd. (2016) 12 SCC 272. It is submitted that the case involved a
     claim for additional depreciation on plant and machinery under Section
B
     32(1) (ii-a) of the IT Act. That provision gave the assessee the option to
     claim additional depreciation, over and above the usual or ordinary
     depreciation mandatorily allowed under Section 32(1) of the IT Act.
     This option had to be exercised by the assessee by filing a statutory
     Form 3-AA along with the Return of Income, which gave details of the
C    plant and machinery and also a certificate that the claim for additional
     depreciation was correctly made. Therefore, if the said Form 3-AA was
     not filed with the Return, it was a clear indication that the assessee had
     opted not to claim additional depreciation. In the case of G.M. Knitting
     (supra), the assessee did not file Form 3-AA along with the return of
     income, but chose to file the Form much later, but before the passing of
D
     the assessment order, which may be passed as long as 26 months after
     the return was filed as provided under Section 153(1) of the IT Act. The
     Revenue rejected the form on the ground that it had not been filed along
     with the return of income and declined to grant additional depreciation
     as claimed by the assessee. It is submitted that this Court held that the
E    requirement that Form 3-AA should be submitted along with return was
     only directory and that therefore even though the Form had been submitted
     long after the filing of the return, the assessee was entitled to claim
     additional depreciation under Section 32(1)(ii-a) of the IT Act.
            4.7 It is submitted that exactly the same principle applies to the
F    interpretation of Section 10B (8) of the IT Act. Section 10B (8) enables
     an assessee to exclude the applicability of the deduction under Section
     10B by filing a declaration to that effect before the last date in which the
     return of income is required to be filed. It is submitted that as held in
     G.M. Knitting (supra), the requirement that the Form should be submitted
     by a certain deadline is directory, though the submission of the Form
G    itself may be regarded as mandatory. It is urged that the present case
     stands on a far stronger footing and on a far higher pedestal as compared
     to G.M. Knitting (supra). This is because Section 10B (8) specifically
     and unequivocally gives the assessee a statutory right to exercise his
     option and to decide not to avail of the benefit of section 10B (8) in a
H    particular Assessment Year. For the purpose of Section 32(1)(ii-a) of
 PRINCIPAL COMMISSIONER OF INCOME TAX-III, BANGALORE                             47
            v. M/S WIPRO LTD. [M. R. SHAH, J.]

the IT Act, by permitting the assessee to file the Form 3-AA long after          A
the return, this Court has in effect permitted the assessee to make one
option at the time of filing the return and change the option long thereafter,
at any time before the assessment is made. That if such change of
option could be permitted under Section 32(1)(ii-a), the case for permitting
it is far stronger under Section 10B (8) where the statute itself expressly
                                                                                 B
and unequivocally gives the assessee the right to change his option. It is
submitted that the basic premise is that a substantive claim, which the
assessee considers to be more beneficial, must be allowed to be made
until the conclusion of assessment and the time within which any form
which enables the claim should be filed, is only directory.
       4.8 It is further submitted that this Court in G.M. Knitting (supra)      C
has specifically approved the judgment of the Bombay High Court in the
case of Commissioner of Income Tax v. Shivanand Electronics
((1994) 209 ITR 63). That judgment dealt with an assessee’s claim for
deduction under Section 80HHC. Section 80HHC specifically prohibited
the grant of deduction under Section 80HHC unless the stipulated audit           D
report was filed along with the return of income. The assessee filed the
required audit report long after the return. The Bombay High Court held
that while the filing of the audit report was mandatory, the requirement
that it should be filed along with the return was only directory,
notwithstanding the peremptory language of the prohibition in Section
80HHC (5). It is of vital importance to note that there is no such prohibition   E
in Section 10B. Further, as already pointed out, Section 10B (8) itself
expressly gives the assessee the right to opt out of section 10B. This
substantive statutory right cannot in law be nullified by construing the
purely procedural time element requirement regarding the filing of the
declaration under Section 10B (8) as mandatory. Reliance is placed on            F
the judgment of the Telangana High Court in the case of Telangana
State Pollution Board v. CBDT (Writ Petition No. 4834/2020, decided
on 26.07.2021).
       4.9 It is further submitted by the learned counsel appearing on
behalf of the assessee that the submission on behalf of the revenue that         G
by the impugned judgment and order and the interpretation by the High
Court, the statutory option expressly given by Section 10B (8) is in effect
nullified and that Section 10B (8) is rewritten by introducing in it a
prohibition similar to Section 80HHC(5), though the legislature did not
enact any such prohibition and it completely overlooks and ignores the
                                                                                 H
48                SUPREME COURT REPORTS                      [2022] 17 S.C.R.


A    legislative background of section 10B has no substance. It is urged that
     as such the issue involved in the present case is directly covered by the
     decision of the Delhi High Court in the case of Moser Baer (supra),
     against which a special leave petition was preferred in this Court and
     the same was dismissed as withdrawn. That the decision of Moser Baer
     (supra) has been subsequently followed in the case of CIT v. Rana
B
     Polycot Ltd. 2011 SCC OnLine P&H 17591. That both these
     judgments are on Section 10B itself and they clearly and unequivocally
     stated that while the submission of the declaration is mandatory, the
     requirement that it should be submitted before the due date of return is
     only directory and Section 10B deduction could not be disallowed if the
C    declaration was filed before the assessment was made.
            4.10 Shri Ganesh, learned counsel appearing on behalf of the
     assessee has submitted that there are a large number of judgments dealing
     with other sections of the IT Act which expressly provide that a particular
     deduction would not be allowed if a particular report or certificate of
D    declaration was not filed along with the return of income. It is submitted
     that in each of the cases, it is held that the requirement of submission of
     the document is mandatory, but the stipulation that it should be filed
     along with the return of income is only directory. Shri Ganesh, learned
     counsel has referred to the following decisions:
E          i)       Moser Baer (supra);
           ii)      RanaPolycot Ltd. (supra);
           iii)     G.M. Knitting Industries Pvt. Ltd. (supra);
           iv)      CIT v. Panama Chemical Works, 2006 SCC OnLine
F                   MP 704;
           v)       CIT v. Punjab Financial Corp. ILR 2002 (1) P&H 438;
           vi)       CITv.Hardeodas Aggarwala Trust; 1991 SCC OnLine
                    Cal.414;
           vii)     CIT v. Gupta Fabs, 2005 SCC OnLine P&H 1315;
G
           viii)    Murali Export House v. CIT, 1995 SCC OnLine Cal.
                    286;
           ix)      CIT v. Berger Paints India Ltd., 2002 SCC OnLine Cal.
                    869; and
H
 PRINCIPAL COMMISSIONER OF INCOME TAX-III, BANGALORE                             49
            v. M/S WIPRO LTD. [M. R. SHAH, J.]

       x)     CIT v. Ramani Relators (P) Ltd., 2014 SCC OnLine                   A
              Mad. 12717.
      It is submitted that therefore on the principle of stare decisis, this
Court may not interfere with the impugned judgment and order passed
by the High Court.
      4.11 Now so far as the submission on behalf of the Revenue that            B
Section 10B is an exemption provision, it is vehemently submitted by the
learned counsel appearing on behalf of the assessee that as held by this
Court in the case of CIT v. Yokogawa India Ltd. (2017) 2 SCC 1,
Section 10B is a deduction provision and not an exemption provision.
      4.12 Making the above submissions and relying upon the aforesaid           C
decisions, it is prayed to dismiss the present appeal.
      5. We have heard Shri Balbir Singh, learned ASG appearing on
behalf of the Revenue and Shri S. Ganesh, learned Senior Advocate
appearing on behalf of the assessee at length and perused the material
on record.                                                                       D
       The short question which is posed for consideration of this Court
is, whether, for claiming exemption under Section 10B (8) of the IT Act,
the assessee is required to fulfil the twin conditions, namely, (i) furnishing
a declaration to the assessing officer in writing that the provisions of
Section 10B (8) may not be made applicable to him; and (ii) the said             E
declaration to be furnished before the due date of filing the return of
income under sub-section (1) of Section 139 of the IT Act.
       6. In the present case, the High Court as well as the ITAT have
observed and held that for claiming the so-called exemption relief under
Section 10B (8) of the IT Act, furnishing the declaration to the assessing       F
officer is mandatory but furnishing the same before the due date of filing
the original return of income is directory. In the present case, when the
assessee submitted its original return of income under Section 139(1) of
the IT Act on 31.10.2001, which was the due date for filing of the original
return of income, the assessee specifically and clearly stated that it is a
                                                                                 G
company and 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. Along with the original return filed on 31.10.2001,
the assessee also annexed a note to the computation of income clearly
stating as above. However, thereafter the assessee filed the revised
return of income under Section 139(5) of the IT Act on 23.12.2002 and            H
50             SUPREME COURT REPORTS                          [2022] 17 S.C.R.


A    filed a declaration under Section 10B (8) which admittedly was after the
     due date of filing of the original return under Section 139(1), i.e.,
     31.10.2001.
           7. It is the case on behalf of the Revenue that as there was a non-
     compliance of twin conditions under Section 10B (8) of the IT Act, namely,
B    the declaration under Section 10B (8) was not submitted along with the
     original return of income, the assessee shall not be entitled to the
     exemption/benefit under Section 10B (8) of the IT Act. According to the
     Revenue, furnishing of declaration under Section 10B (8) before the due
     date of filing original return of income is also mandatory. On the other
     hand, it is the case on behalf of the assessee, which has been accepted
C    by the High Court, that the requirement of submission of declaration
     under Section 10B (8) is mandatory in nature, but the time limit within
     which the declaration is to be filed is directory in nature.
            8. While considering the issue involved, whether the time limit
     within which the declaration is to be filed as provided under Section 10B
D    (8) is mandatory or directory, Section 10B (8) is required to be referred
     to, which 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
E          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.”
             On a plain reading of Section 10B (8) of the IT Act as it is, i.e.,
F    “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 Section 10B may
     not be made applicable to him, the provisions of Section 10B shall not
     apply to him for any of the relevant assessment years”, we note that the
G    wording of the Section 10B (8) is very clear and unambiguous. For
     claiming the benefit under Section 10B (8), the twin conditions of
     furnishing the declaration to the assessing officer in writing and that the
     same must be furnished before the due date of filing the return of income
     under sub-section (1) of section 139 of the IT Act are required to be
     fulfilled and/or satisfied. In our view, both the conditions to be satisfied
H    are mandatory. It cannot be said that one of the conditions would be
 PRINCIPAL COMMISSIONER OF INCOME TAX-III, BANGALORE                           51
            v. M/S WIPRO LTD. [M. R. SHAH, J.]

mandatory and the other would be directory, where the words used for           A
furnishing the declaration to the assessing officer and to be furnished
before the due date of filing the original return of income under sub-
section (1) of section 139 are same/similar. It cannot be disputed that in
a taxing statute the provisions are to be read as they are and they are to
be literally construed, more particularly in a case of exemption sought by
                                                                               B
an assessee.
        9. In such a situation, filing a revised return under section 139(5)
of the IT Act claiming carrying forward of losses subsequently would
not help the assessee. In the present case, the assessee filed its original
return under section 139(1) and not under section 139(3). Therefore, the
Revenue is right in submitting that the revised return filed by the assessee   C
under section 139(5) can only substitute its original return under Section
139(1) and cannot transform it into a return under Section 139(3), in
order to avail the benefit of carrying forward or set-off of any loss under
Section 80 of the IT Act. The assessee can file a revised return in a
case where there is an omission or a wrong statement. But a revised            D
return of income, under Section 139(5) cannot be filed, to withdraw the
claim and subsequently claiming the carried forward or set-off of any
loss. 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       E
cannot be permitted to substitute the original return of income filed under
section 139(1) of the IT Act. Therefore, claiming benefit under section
10B (8) and furnishing the declaration as required under section 10B (8)
in the revised return of income which was much after the due date of
filing the original return of income under section 139(1) of the IT Act,       F
cannot mean that the assessee has complied with the condition of
furnishing the declaration before the due date of filing the original return
of income under section 139(1) of the Act. As observed hereinabove,
for claiming the benefit under section 10B (8), both the conditions of
furnishing the declaration and to file the same before the due date of
filing the original return of income are mandatory in nature.                  G

      10. Even the submission on behalf of the assessee that it was not
necessary to exercise the option under section 10B (8) of the IT Act and
even without filing the revised return of income, the assessee could have
submitted the declaration in writing to the assessing officer during the
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52             SUPREME COURT REPORTS                          [2022] 17 S.C.R.


A    assessment proceedings has no substance and the same cannot be
     accepted. Even the submission made on behalf of the assessee that
     filing of the declaration subsequently and may be during the assessment
     proceedings would have made no difference also has no substance. The
     significance of filing a declaration under section 10B (8) can be said to
     be co-terminus with filing of a return under section 139(1), as a check
B
     has been put in place by virtue of section 10B (5) to verify the correctness
     of claim of deduction at the time of filing the return. If an assessee
     claims an exemption under the Act by virtue of Section 10B, then the
     correctness of claim has already been verified under section 10B (5).
     Therefore, if the claim is withdrawn post the date of filing of return, the
C    accountant’s report under section 10B (5) would become falsified and
     would stand to be nullified.
             11. Now so far as the reliance placed upon the decision of this
     Court in the case of G.M. Knitting Industries Pvt. Ltd. (supra), relied
     upon by the learned counsel appearing on behalf of the assessee is
D    concerned, Section 10B (8) is an exemption provision which cannot be
     compared with claiming an additional depreciation under section 32(1)
     (ii-a) of the Act. As per the settled position of law, an assessee claiming
     exemption has to strictly and literally comply with the exemption
     provisions. Therefore, the said decision shall not be applicable to the
     facts of the case on hand, while considering the exemption provisions.
E    Even otherwise, Chapter III and Chapter VIA of the Act operate in
     different realms and principles of Chapter III, which deals with “incomes
     which do not form a part of total income”, cannot be equated with
     mechanism provided for deductions in Chapter VIA, which deals with
     “deductions to be made in computing total income”. Therefore, none of
F    the decisions which are relied upon on behalf of the assessee on
     interpretation of Chapter VIA shall be applicable while considering the
     claim under Section 10B (8) of the IT Act.
           12. Even the submission on behalf of the assessee that the assessee
     had a substantive statutory right under Section 10B (8) to opt out of
G    Section 10B which cannot be nullified by construing the purely procedural
     time requirement regarding the filing of the declaration under Section
     10B (8) as being mandatory also has no substance. As observed
     hereinabove, the exemption provisions are to be strictly and literally
     complied with and the same cannot be construed as procedural
     requirement.
H
 PRINCIPAL COMMISSIONER OF INCOME TAX-III, BANGALORE                           53
            v. M/S WIPRO LTD. [M. R. SHAH, J.]

       13. So far as the submission on behalf of the assessee that against     A
the decision of the Delhi High Court in the case of Moser Baer(supra),
a special leave petition has been dismissed as withdrawn and the revenue
cannot be permitted to take a contrary view is concerned, it is to be
noted that the special leave petition against the decision of the Delhi
High Court in the case of Moser Baer(supra) has been dismissed as
                                                                               B
withdrawn due to there being low tax effect and the question of law has
specifically been kept open. Therefore, withdrawal of the special leave
petition against the decision of the Delhi High Court in the case of Moser
Baer(supra)cannot be held against the revenue.
       14. In view of the above discussion and for the reasons stated
above, we are of the opinion that the High Court has committed a grave         C
error in observing and holding that the requirement of furnishing a
declaration under Section 10B (8) of the IT Act is mandatory, but the
time limit within which the declaration is to be filed is not mandatory but
is directory. The same is erroneous and contrary to the unambiguous
language contained in Section 10B (8) of the IT Act. We hold that for          D
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. Accordingly, the question of law is answered in favour of the
Revenue and against the assessee. The orders passed by the High Court          E
as well as ITAT taking a contrary view are hereby set aside and it is held
that the assessee shall not be entitled to the benefit under Section 10B
(8) of the IT Act on non-compliance of the twin conditions as provided
under Section 10B (8) of the IT Act, as observed hereinabove. The
present Appeal is accordingly Allowed. However, in the facts and               F
circumstances of the case, there shall be no order as to costs.

Ankit Gyan and Amarendra Kumar                               Appeal allowed.
(Assisted by : Adnan Khan, LCRA)

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