THE PRINCIPAL COMMISSIONER OF INCOME TAX vs. M/S. TRINITY ARCADE PRIVAE LTD.

ITA/134/2016HC KeralaKLHC01026933201624 October 2017Author: HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU,HONOURABLE MR.JUSTICE ANTONY DOMINIC4 pages
AI SummaryDismissed

What were the facts?

The Revenue has filed these appeals against a common order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The ITAT had taken on record an audit report in Form 10CC and remitted the matter back to the Assessing Officer (AO) for reconsideration of the assessee's claim for deduction under Section 80IB(10) of the Income Tax Act. The Tribunal held that the non-submission of the audit report at the assessment or appellate stage before the Commissioner should not be a ground to deny the deduction. This order was passed by the ITAT following the judgment of the Calcutta High Court in CIT v. Magnum Exports (P) Limited. The assessment years involved are 2006-2007, 2008-2009, and 2007-2008.

What did the High Court hold?

The High Court held that while Section 44AB requires accounts to be audited for claiming benefits under Section 80IB(10), the benefit itself was not made dependent on the production of audited accounts before the Assessing Officer. The court considered the requirement of producing audited accounts as directory, meaning that non-production at the assessment stage would not be fatal to the assessee's claim. The High Court found no illegality in the Tribunal's action of accepting the audited accounts and directing reconsideration by the AO. The court noted that this reasoning was consistent with the judgment of the Punjab and Haryana High Court in the case relied upon by the Revenue. Therefore, the appeal filed by the Revenue was dismissed.

What were the issues?

The questions of law before the High Court were: 1. Whether, on an interpretation of Section 80IA(7), the assessee should not have furnished the audit report along with the return of income? 2. Is not the interpretation of the latter part of Section 80IA(7) perverse and unintended by the legislature? 3. Whether, on the facts and in the circumstances of the case, and on an interpretation of Section 80IA(7) of the Income Tax Act, the Tribunal was right in law in its interpretation, and whether the assessee should not have produced the audit report before the Assessing Authority along with the return? Contentions of the Revenue: The Revenue argued that it was impermissible for the Tribunal to accept the audit report at that stage and remit the matter to the AO, especially when the assessee failed to produce it at any stage prior to the completion of assessment. The Revenue relied on the judgment of the Punjab High Court in Pal Properties (I) Pvt. Ltd. v. CIT. Contentions of the Assessee: The judgment does not record specific contentions made by the assessee.

Which sections of the Income-tax Act were involved?

Section 80IB(10),Section 80IA(7),Section 44AB

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU TUE AY, THE 24TH DAY OF OCTOBER 2017/2ND KARTHIKA, 1939 ITA.No. 134 of 2016 -------------------- AGAINST THE ORDER IN ITA 85/2015 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 11.5.2016

APPELLANT/RESPONDENT/REVENUE: ----------------------------- THE PRINCIPAL COMMISSIONER OF INCOME TAX KOCHI-I, KOCHI, INCOME TAX OFFICES, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, KOCHI -682 018. BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/RESPONDENT: ---------------------- M/S. TRINITY ARCADE PRIVATE LTD. 35/1759A, TRINITY HOUSE, CHANGAMPUZHA PARK, EDAPPALLY P.O, KOCHI -682 014. R. BY ADV. SRI.MOHAN PULIKKAL R. BY ADV. SMT.MANJU RAJAN R. BY ADV. SRI.P.P.NARAYANAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 24-10-2017 ALONG WITH I.T.A.NOS.144 & 150 OF 2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ANTONY DOMINIC, J. & DAMA SESHADRI NAIDU, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I.T.A.Nos.134, 144

The order continues below.

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