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Income Tax Appellate Tribunal, DELHI
Before: SH. R.K.PANDA & SH. ANUBHAV SHARMA
The appeal has been filed by the assessee against the order dated 01.02.2019 in appeal no. 10183/16-17 for the assessment year 2013-14 passed by the Commissioner of Income Tax (Appeals)-8, New Delhi in appeal pending before him against order dated 22.03.2016 u/s. 143(3) of the Income Tax, 1961 (hereinafter referred as ‘the Act’)
The facts in brief are that the assessee is engaged in the business of providing services of warehousing, distribution, logistics, custom clearance ./2019 M/s. Srikaram Prescience P. Ltd. inside and outside the special economic zone (SEZ) / Free Trade Warehousing Zone (FTWZ) to its clients. The appellant had filed return of income on 27.09.2013 for AY 2013-14, declaring income of Rs. NIL. The case was taken up for scrutiny and assessment u/s 143(3) of the Act was completed by assessing officer (in short – the AO) on 22.03.2016, determining assessed income at at Rs. 69,95,410/-, by making addition of Rs. 69,95,410/- as follows: (i) addition on account of disallowance of deduction claimed u/s 10AA of I.T.Act amounting to Rs. 51,49,533/-, (ii) addition of Rs. 18,45,881/- on account of income from other sources u/s 56 of I.T.Act.
In appeal, the Ld. CIT(A) had deleted the addition on account of income from other sources u/s 56 of the Act but confirmed the disallowance of Rs. 51,49,533/-.
Now before the Tribunal the assessee has raised following grounds of appeal :-
“1. That the order of learned CIT(A) partly sustaining the order of the learned Assessing Officer is bad in law and on facts and is liable to be set-aside.
2. That having regard to the facts and circumstances of the case, learned CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing officer of making disallowance of Rs. 51,49,533/- claimed as exempt u/s 10AA of the Income Tax Act, 1961 by the appellant.
3. That having regard to the facts and circumstances of the case, learned CIT(A) has erred in concluding that the appellant was not entitled to deduction u/s 10AA of the Income Tax Act, 1961 on the ground that appellant had failed to furnish Audit Report in Form 56F electronically alongwith return of income without appreciating the facts that hard copy of said form was filed before the learned Assessing officer before the completion of ./2019 M/s. Srikaram Prescience P. Ltd. assessment proceedings and Electronically filing of Form 56F was made mandatory only w.e.f. AY 2014-15.
4. That orders passed by learned CIT(A) and learned Assessing Officer are against the principles of natural justice as provision regarding filing of Form 56F is directory in nature and not mandatory i.e. could be filed even during the course of assessment proceedings.
That having regard to the facts and circumstances of the case, learned CIT(A) having admitted the additional evidences under Rule 46A, which have been considered by the learned AO in his remand report, CIT(A) was not justified in not giving the benefit of exemption claimed u/s 10AA of the Income Tax Act, 1961.
That the appellant craves the leave to add, amend, modify, delete any of the grounds of appeal
before or at the time of hearing and all the above grounds are without prejudice to each other.”
5. Heard the Ld. AR and Ld. Sr. DR and perused the record. It was submitted on behalf of Ld. AR that the provision of Sections 10A of the Act was inserted with retrospective effect from 01.04.2014 while the case of assessee pertains to assessment year 2013-14. Ld. AR relied the following judicial pronouncements to contend that if the compliance is made before assessment was completed, law mandates that requirement of relevant provisions has been done.
1. CIT vs. G.M.Knitting Industries Pvt. Ltd. [2016] 71 taxmann.com35(SC) 2. CIT vs. Nagpur Hotel Owners’ Association [2001] 247 ITR 201/114 Taxman 255(SC) 3. ITO vs. Last Peak Data (P) Ltd. [2015] 63 taxmann.com 45 (Kolkata-Trib.) 4. CIT vs. Contimeters Electricals(P.) Ltd. [2009] 178 Taxman 422 (Delhi) 5. CIT vs. Web Commerce (India) Pvt. Ltd. [2009] 178 Taxman 310 (Delhi)] 6. CIT vs. AKS Alloys (P.) Ltd. [2012] 18 taxmann.com25 (Mad.) 5.1 Ld. DR submitted that there is no error in the findings of tax authorities below. ./2019 M/s. Srikaram Prescience P. Ltd. 6. Giving thoughtful consideration to the matter on record it can be observed that Ld. CIT(A) has confirmed the addition observing that since the Form No. 56F was to be filed electronically along with return of income which the appellant had failed, therefore the AO was right in disallowing the claim of appellant. The order indicates that the assessee had filed copy of Form No. 56F vide letter dated 14.03.2016 to claim deduction u/s 10A during the assessment proceedings and on 22.03.2016 the assessment order was passed. The Bench is of considered opinion that the Proviso to Sub Rule 2 of Rule 12 of the Income Tax Rules, 1962 has made furnishing of report electronically mandatory and as per the Rule 12 cited before the Bench, which is available on page no. 2 to 11 of the paper book, as with regard to Section 10A this mandatory requirement is effective retrospectively from 01.04.2014 so in the present assessment year of 2013-14, it was not actually applicable.
Then furnishing the report by electronic means is merely one of the modes and nothing is cited on behalf of revenue to show that the non- compliance would result into non-consideration of the report submitted in physical form. The judgment which ld. Counsel for assessee has cited firmly lay down that the requirements under various provisions of the Act requiring assessee to file any report, are generally directory in nature and the compliance is expected from the assessee any time before the framing of assessment. Particular reference can be made to the judgment of Hon’ble Delhi High Court in the case of Commissioner of Income Tax vs Web Commerce (India) Pvt. Ltd. where in para no. 2, Hon’ble High Court has held : “This Court has already interpreted the latter provisions and has held the same to be directory and not mandatory. The contention of the revenue was that unless and until the audit report is filed along with the return, the benefit of section 10A cannot be available to the assessee. Recently, we have considered the identical provisions of section 80-IA(7) in the case of CIT v. Contimeters Electricals (P.) Ltd. [IT Appeal No. 1366 of 2008, decided on 2-12-2008] and held that as long as the audit report is ./2019 M/s. Srikaram Prescience P. Ltd. filed before the framing of the assessment, the provisions of section 80-IA(7) would be complied with inasmuch as the same are directory and not mandatory. A similar view would have to be taken in the present case also inasmuch as the provisions are the same. Consequently, we do not find any fault with the conclusions arrived at by the Tribunal. No substantial question of law arises for our consideration. The appeal is dismissed.”
In the light of aforesaid discussion of the facts and law, the Bench is of considered opinion that Ld. CIT(A) had fallen in error in confirming the addition, for mere reason that although hard copy was filed before the assessment was completed, the same was not filed electronically along with return of income. The grounds raised
are sustained.
9. The appeal is allowed and the impugned order is set aside.