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Income Tax Appellate Tribunal, ‘’D’’ BENCH, AHMEDABAD
आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’D’’ BENCH, AHMEDABAD BEFORE, SHRI A.D. JAIN, VICE PRESIDENT And SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1068/AHD/2017 �नधा�रण वष�/Asstt. Year: 2009-2010
Nayab International, A.C.I.T, Saint Kabir Road, Vs. Circle-1(3), Gendigate, Vadodara. B/h. Police Station, Vadodara. PAN: AADFN9484A
(Applicant) (Respondent) Assessee by : Shri Bhavin Marfatia, A.R Revenue by : Smt. Smiti Samant, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 08/04/2019 घोषणा क� तार�ख /Date of Pronouncement: 10/04/2019 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)-3, Vadodara [Ld.CIT(A) in short], dated 01/02/2015 arising in the matter of assessment order passed under s. 143 r.w.s 147 of the Income Tax Act, 1961 (here-in- after referred to as "the Act") dated 06/01/2015 relevant to Assessment Year (AY) 2009-10.
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The assessee has raised the following grounds of appeal:
All the grounds of appeal in this appeal are mutually exclusive and without prejudice to each other. 1. The learned Commissioner of Income Tax (Appeals) - 3, Vadodara ["the CIT(A)"] erred in fact and in law in confirming the action of the Deputy Commissioner of Income Tax (u the AO'') in reopening the assessment proceedings u/s 147 of the Income Tax Act, 1961 (''the Act"). 2. The learned CIT(A) erred in fact and in law in confirming the action of the AO in reopening the assessment u/s. 147 based on change of opinion. 3. The learned CIT(A) erred in fact and in law in confirming the action of the AO in disallowing deduction claimed u/s. 1OA amounting to Rs. 25,15,494/-. 4. Without prejudice to Ground No. 3, the learned CIT(A) erred in fact and in law in confirming the action of the AO in not allowing the claim of deduction u/s. 10A of the Act despite the fact that the necessary certificate in Form No. 56F was duly filed before the AO before the completion of assessment. 5. The learned CIT(A) erred in fact and in law in confirming the action of the AO in charging interest u/s 234B of the Act. 6. The learned CIT(A) erred in fact and in law in confirming the action of the AO in charging interest u/s 234C of the Act. 7. The learned CIT(A) erred in fact and in law in confirming the action of the AO in charging penalty u/s 271(l)(c) of the Act. Your appellant craves the right to add or alter, amend, substitute, delete or modify all or any of the above grounds of appeal.
First, we take up the ground of appeal no. 3 of the appeal.
The issue raised in this ground of appeal is that the learned CIT (A) erred in confirming the order of the AO by denying the deduction claimed under section 10A of the Act due to non-filing the report in form No. 56F. Page 2 of 9
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Briefly stated facts are that the assessee in the present case is a partnership firm and engaged in the manufacturing business of glass lenses and frames. The AO during the assessment proceedings observed that the assessee had not furnished the report in form 56F within the time as provided under section 10A(5) of the Act. Therefore the AO denied the deduction claimed by the assessee for Rs. 25,15,494.00 under section 10A of the Act as claimed by the assessee. Accordingly, the AO added the sum of Rs. 25,15,494.00 to the total income of the assessee.
Aggrieved assessee preferred an appeal to learned CIT (A) who confirmed the order of the AO.
Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. The learned AR before us filed a paper book running from pages 1 to 121 and submitted that the report in form 56F was filed during the assessment proceedings under section 147 of the Act before the completion of the assessment. Therefore the assessee has duly complied the provisions of section 10A(5) of the Act
On the other hand, the learned DR submitted that the assessee in the original assessment proceedings had not furnished the report in form 56F. Therefore the assessee is not eligible for deduction under section 10A of the Act. The learned DR vehemently supported the order of authorities below.
We have heard the rival contentions and perused the materials available on record. The assessee in the instant case file revised return of income dated 26-10-2010 along with the report in form 56F dated 25-09-2010 claiming the Page 3 of 9
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deduction under section 10A of the Act for Rs. 25,15,494.00 only. As the assessee filed the report in form 56F in the revised return of income, accordingly the AO was of the view that there was no report filed by the assessee in form 56F along with the original return of income. Therefore the AO denied the deduction claimed by the assessee under section 10A of the Act in the absence of audit report in form 56F. The view taken by the AO was subsequently confirmed by the learned CIT (A).
At this juncture we find important to reproduce the provisions of section 10A of the Act which reads as under: 66[Special provision in respect of newly established undertakings in free trade zone, etc. 67 10A. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXX (5) The deduction under 74[this section] shall not be admissible for any assessment year beginning on or after the 1st day of April, 2001, unless the assessee furnishes in the prescribed form 75, alongwith the return of income, the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.
8.1 A perusal of the above provisions reveals that the deduction under section 10A of the Act will be available to the assessee only in the event the assessee furnishes the necessary details in the prescribed form. Therefore non- filing of the report in the prescribed form will disentitle the assessee from claiming deduction under section 10A of the Act.
8.2 However, we note that the Hon’ble Gujarat High Court in the case of CIT Vs Gujarat Oil and Allied Industries reported in 201 ITR 325 has held that the requirement of filing the report for claiming the deduction under section 80J of the Act is not mandatory. As such the requirement of section Page 4 of 9
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80J of the Act for filing the prescribed report is the directory in nature. The provision of section 80J are akin to the provision of section 10A of the Act as far as filing the prescribed report is concern. Accordigly we can draw the support from the judgement of Hon’ble Gujarat High Court as stated above. Therefore filing the prescribed report during the assessment proceedings will suffice the requirement of the provisions of section 10A of the Act. The relevant extract of the judgment is reproduced as under: “The first part of section 80J is mandatory in nature but the second part thereof which is procedural in nature and requires the assessee to submit a report of the audit along with the return is merely directory in nature and it calls for only substantial compliance. It is possible that at the time when the returns of income are filed, by some mischance or negligence of the clerk or for any other reason, even though the audited report is available, it might not have been annexed to the return and on such mistake being found out, the report may be tendered on the next day or even a few days thereafter to the ITO. If any literal compliance with the words assessee furnishes report along with his return of income is insisted upon, then, in such an unforeseen contingency, the assessee would be denied benefit of section 80J. One other illustration can be considered to highlight the position. As per section 139(1) read with section 139(5) the assessee can file return within the period permitted thereunder and even during the extended period or can file a revised return as per this provision, of course, after following the procedure laid down therein. If the assessee is prompt, he may file the return in time, but at that stage, for reasons beyond his control, the audit report is not ready, he files the return in time but without its being accompanied by the auditor's report while another assessee who is not prompt enough may not file the return at the first opportunity. In such a contingency, a prompt assessee who files the return in time would stand to suffer only because the auditors' report has not physically accompanied the return while another assessee who waits till the end of the expiry of the period and files the return with the report will stand to gain, as he would get the benefit of section 80J(1) while the assessee who files the return at the first opportunity would stand to suffer though, in both the cases, at the time when the assessments are framed, the audited reports are made available by both the assessees to the ITO. This would result in absurdity. Hence, the Tribunal was right when it took the view that the second part of the provision regarding furnishing of the report of the auditor along with the return was not a mandatory provision and it requires substantial compliance in the sense that it should be made available to the ITO before the assessment was framed and, by that time, if the assessee puts his house in order, the ITO would be required to
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consider the case of the assessee for deductions under section 80J(1) on the merits.”
8.3 It is an undisputed fact that the assessee has filed the report in the prescribed form before the completion of the assessment proceedings under section 147 of the Act. Therefore we are of the view that the assessee has sufficiently complied the provisions of section 10A of the Act for claiming the deduction. Hence in our considered view, no disallowance in the given facts and circumstances can be made due to non-filing of the report in the form 56F within the time as prescribed for the deduction under section 10A of the Act.
8.4 We also find guidance from the order of Delhi Tribunal the case of Xavient Software Solutions (India) Pvt. Ltd. versus CIT in ITA No. 140/DEL/2017 wherein it was held as under:
We have considered the rival submissions and have gone through the entire material available on record. The vital question to be adjudicated in this appeal, inter alia, is whether the Id. Authorities below were justified in not considering the audit report furnished by the assessee in Form No. 56F during the course of re-assessment order on the premise that the said report was not filed alongwith the return or upto the original assessment order. The requisite audit report in form No. 56F was admittedly filed by the assessee in reassessment proceedings, though the assessee has claimed that the said report was also filed in original assessment proceedings, as deposed in the affidavit. The Id. Authorities below appear to have not taken cognizance of the audit report in Form No. 56F, furnished by the assessee in the reassessment proceedings in support of its claim, stating that the assessee failed to furnish any evidence to substantiate that any such audit report was filed in the original assessment proceedings. It is also an undisputed fact that the claim made by assessee stood accepted in original assessment order. We have gone through various decisions relied on behalf of the parties and we find that this issue is squarely covered in favour of the assessee by the decision of coordinate Bench in the case of G.S. Pharmbutor Pvt. Ltd. vs. ACIT (ITA No. 4255 identical facts and circumstances decided the issue in favour of the assessee holding as under:
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"6. We have heard both the parties and perused the material on record, 7. It is not in dispute that in the original assessment made under sec. 143(3) of the Act dated 24.10.2005 for the Assessment Year 2003-04 and assessment order under sec. 143(3) dated 10.03.2007 for the Assessment Year 2004-05, the assessee's claim of deduction under sec. 8o-IB was allowed by the Assessing Officer. Thereafter, the AO reopened the assessment under sec, 147 of the Act for the reason that audit report in Form 10CCB was not filed along with the return of income. In response to the notice issued under sec, 148 of the Act, the assessee submitted before the Assessing Officer that original return of income already filed on 2.12.2003 and 29.10.2004 for the Assessment Years 2003-04 and 2004-05 respectively may be treated as a return filed under sec. 148 of the Act. Thereafter, the assessee vide letter dated 12.01.2009 and 17.08.2009 in the reassessment proceedings for the Assessment Years 2003-04 and 2004-05 respectively submitted, amongst others, before the AO that filing of audit report along with the return of income is not mandatory but is to be treated as director and filing of the audit report during the assessment proceedings will be sufficient to comply the provisions of law contained in that behalf and accordingly, a copy of form 10CCB dated 20.04.2003 and 10.10.2004 obtained from Aggarwal Sarraf & Co, Chartered Accountant, pertaining to the Assessment Years 2003-04 and 2004-05, was furnished. It is, thus, clear that the audit report in Form 10CCB was available with the AO at the time when the assessment under sec. 147 of the Act was made. The claim of the assessee u/s 8o-IB has been disallowed in the reassessment made under sec. 147 of the Act though the same was allowed in the original assessment made under sec. 143(3) of the Act. In the case of CIT vs. Gujarat Oil & Allied Industries, 201 ITR 325 (Guj.), the Hon'ble Gujarat High Court has taken a view that the requirement of filing of an audit report under sec. 8oJ(6A), which is similar to that of sec. 8o-IA(7), is to be taken as a directory in nature, and in case, the audit report is submitted at any time before framing of the assessment, there will be substantial compliance with the provisions of sec. 8oJ(6A) of the Act. An identical view has also been taken by the Hon'ble Madras High Court in the case ofCIT vs. A.M. Arunachalam, 208ITR 481 (Mad.). There are other decisions of other Courts taking the same view as under: - (ii) CIT vs. Shivanand Electricals (1994) 209 ITR 63 (Bom.), (ii) Zenith Processing Mills v. CIT (1996) 219 ITR 721 (Guj.), (Hi) CIT Vs. Jayant Patel (2001) 248 ITR 199 (Mad.). (iv) CIT Vs Mahalaxmi Rice Factory (2007) 294 ITR 631 (P&H). Referring to the aforesaid decisions, the Hon'ble Jurisdictional Delhi High Court in the case of CIT vs. Contimeters Electricals Pvt. Ltd. (2009) 317 ITR 249 (Delhi) has also taken a view that requirement of filing the audit report along with
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return is not mandatory but directory, and that if the audit report is filed at any time before framing of the assessment, the requirement of sec. 8o-IA(7) would be met. 8. In the present case, the audit report in Form No.lOCCB was filed by the assessee during the reassessment proceedings completed under sec. 147 of the Act, during the course of which, the AO disallowed the assessee's claim of deduction under sec. 8o-IB on the ground that the audit report was not filed along with the return of income. The expression "assessment" includes re-assessment as defined in sub-sec.(8) of sec. 2 of the Act. In the present case, the relevant assessment order is the assessment made under sec. 147 of the Act during the course of which proceedings, the assessee has furnished the audit report in prescribed form. We, therefore, hold that the requirement of filing the audit report for claiming the deduction under sec. 8o-IB has been satisfied by the assessee, and therefore, on this reason alone, the assessee's claim of deduction under sec. 8o-IB is not disallowable. We, therefore, delete the disallowance of assessee's claim made under sec. 80-IB of the Act as the assessee has satisfied the condition of filing audit report during assessment proceedings initiated under sec. 147 of the Act. The Assessing Officer shall modify the assessment order accordingly. 9. In the course of hearing of these appeals, the assessee has also challenged the validity of proceedings under sec. 147 of the Act as well as the assessment made under sec. 147 of the Act on various grounds. Since the main issue of disallowance of assessee's claim of deduction under sec. 8o-IB has been decided in favour of the assessee as above, other grounds of appeal raised by the assessee have become redundant and need no adjudication at this stage." This order of ITAT, Delhi Bench, stood affirmed by the Hon'ble jurisdictional High Court in appeals of Revenue bearing ITA No. 134/2013 and 135/2013 vide order dated 19.03.2013 (copy placed on record). Therefore, respectfully following the decision of co-ordinate Bench and of Hon'ble Jurisdictional High Court, the impugned order is found not sustainable at all. As also observed by the coordinate Bench in the aforesaid decision, since the core issue stood decided in favour of the assessee, being covered by the said decision, the other grounds raised on the validity of re- assessment proceedings need no adjudication at this juncture. Accordingly, the claim of assessee deserves to be allowed and the appeal of the assessee is found fit to be allowed.
In view of the above, we are of the considered view that the assessee is entitled to the deduction under section 10A of the Act. Hence the ground of appeal of the assessee is allowed.
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8.5 No other point was argued by either of the party during the hearing.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the Court on 10/04/2019 at Ahmedabad.
-Sd- -Sd- (A.D. JAIN) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 10/04/2019 Manish
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