🧾 Case Summary: PCIT v. Wipro Ltd. [2022] 446 ITR 1 (SC)

🏛️ Background:

Wipro Limited, a 100% Export Oriented Unit (EOU), filed its return of income for Assessment Year (AY) 2001-02 on October 31, 2001, declaring a loss of ₹15.47 crore and simultaneously claimed exemption under Section 10B of the Income Tax Act, 1961. Subsequently, on October 24, 2002, Wipro filed a declaration under Section 10B(8), opting out of the exemption, and filed a revised return on December 23, 2002, to carry forward the losses under Section

⚖️ Issue:

Whether the filing of a declaration under Section 10B(8) after the due date prescribed under Section 139(1) is valid, thereby allowing the assessee to withdraw the exemption claim and carry forward losses

🧑‍⚖️ Supreme Court's Decision:

The Supreme Court held that:

• Mandatory Compliance: Both conditions stipulated in Section 10B(8)—furnishing a declaration in writing and doing so before the due date of filing the return under Section 139(1)—are mandatory.

• Invalid Withdrawal: Since Wipro failed to file the declaration within the stipulated time, it could not withdraw the exemption claim, and consequently, the losses could not be carried forward.

• Revised Return Limitations: A revised return under Section 139(5) is intended to correct omissions or mistakes, not to introduce new claims or withdraw existing ones.

• Exemption vs. Deduction: The Court emphasized that provisions granting exemptions (like Section 10B) require strict compliance, distinguishing them from deduction provisions under Chapter VI-A, which might allow for more leniency.

📌 Key Takeaways:

• Timely Declarations are Crucial: For EOUs, filing declarations under Section 10B(8) within the due date is essential to exercise the option of not availing the exemption.

• Strict Interpretation: Exemption provisions are to be interpreted strictly, and procedural lapses can lead to denial of benefits.

• Revised Returns Limitations: Filing a revised return does not cure the defect of a delayed declaration under Section 10B(8).

🔍 Contrasting Judicial Views:

While the Supreme Court in Wipro's case took a stringent view, other judicial pronouncements have adopted a more lenient approach in similar contexts:

1. CIT v. G.M. Knitting Industries (P.) Ltd. [2015] 376 ITR 456 (SC):

The Supreme Court allowed a belated declaration for additional depreciation under Section 32(1)(iia), treating the requirement as procedural. However, in Wipro's case, the Court distinguished this ruling, emphasizing the difference between deduction and exemption provisions.

2. DCIT v. Clarion Technologies Pvt. Ltd. (ITAT Pune):

The Tribunal held that the benefit under Section 10A could not be denied merely due to the non-filing of the audit report in Form 56F along with the return, especially when the report was furnished during assessment proceedings.

3. ACN Infotech (India) Pvt. Ltd. v. ACIT (ITAT Visakhapatnam):

In this case, the assessee initially claimed deduction under Section 10B instead of the applicable Section 10AA. Upon realizing the error, it submitted the correct audit report during assessment proceedings. The Tribunal allowed the deduction, treating the mistake as a bona fide error.

✍️ Conclusion:

The ruling in PCIT v. Wipro Ltd. underscores the importance of adhering to statutory timelines, especially concerning exemption provisions. While some judicial forums have shown leniency in procedural lapses, the Supreme Court's decision establishes a precedent for strict compliance. Taxpayers must ensure timely filings to safeguard their claims and avoid potential litigations.