JUDGMENT :

JYOTSNA REWAL DUA, J.

1. The revenue has filed this appeal against the order of learned Income Tax Appellate Tribunal (in short ITAT) allowing certain deductions to the assessee under Section 80IB(10) of the Income Tax Act even though its return of income for assessment year 2006-2007 was filed beyond the period prescribed under Section 139(1) of the Act and the deductions were claimed only in the revised return furnished later.

2. Facts:

(i) The assessee is M/s H.P. Housing & Urban Development Authority, (HIMUDA), Nigam Vihar, Shimla. The main function of the assessee is to develop housing facilities in the State. It filed return of income on 31.03.2007 for AY 2006-2007 declaring an income of Rs. 2,33,74,215/-. On 31.03.2008, the assessee filed a revised return declaring income of Rs. 11,86,511/- and also claiming deduction of Rs. 2,25,43,724/- under Section 80IB(10) of the Act.

(ii) The Assessing Officer (AO in short) in his assessment order dated 16.12.2009 under Section 143(3) of the Act declined the deduction claimed by the assessee under Section 80 IB(10) of the Act in its revised return. This was for the reason that the assessee had not filed the original return within the permissible period under Section 139 (1) of the Act. The AO held that return of income was filed by the assessee beyond the due date provided under Section 139(1). In view of provisions of Section 80 AC of the Act, the assessee was not entitled to claim deduction under Section 80IB(10) of the Act. Nevertheless, the merits of assessee’s deduction claim was also examined by the AO projectwise and he found that none of the concerned 21 projects was eligible for deduction under Section 80IB(10) of the Act. However, on the basis of revised return, the AO further added administrative charges and transfer charges as revenue receipts of the assessee. This sum was added to the total income of the assessee. The net taxable income was accordingly computed.

(iii) The Commissioner of Income Tax (Appeals) (CIT in short) passed a common order on 27.02.2012 under Section 250 (6) of the Act in the three appeals preferred by the assessee for the assessment years 2006-2007, 2007-2008 and 2008-2009.

The CIT held that the assessee could not have filed revised return since its original return was filed beyond the period prescribed under Section 139(1) of the Act ; As per Section 80AC, deduction under Section 80IB cannot be allowed unless the return is filed by the due date specified in Section 139 (1). After concurring with AO regarding non-entitlement of the assessee to the deduction claimed by it under Section 80 IB(10), the CIT also examined the merits of the assessee’s deduction claim projectwise. It held that out of claimed deduction, only Rs. 2,11,055.58 was taxable and rest was liable to be deducted under Section 80 IB (10) of the Act. The finding of AO that the transfer charges were to be added to the assessee’s taxable income was upheld. The Assessing Officer’s order of adding administrative charges in the income of assessee was, however, held wrong. The amount was ordered to be deleted.

(iv) The assessee approached the Income Tax Appellate Tribunal (ITAT) by filing three separate appeals for the assessment years 2006-2007, 2007-2008 and 2009-2010. The assessee claimed that filing of its return was delayed due to delay by the local Audit Department ; The deduction admissible to it in law cannot be denied owing to this bona-fide reason and consequent delay in filing the revised return. Learned ITAT framed following two questions for decision:

“(a) Whether deduction claimed under section 80IB in a non-est return be allowed or not?

(b) Whether the deduction claimed by the assessee before the appellate authority which was originally not claimed owing to the fact that the audit of the books of accounts of the assessee has been delayed and the deduction was claimed after the completion of the audit.”

Regarding the issue as to whether the deduction claimed under Section