METRO BRANDS LIMITED ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 2(2)(1), MUMBAI

It was submitted that the Centralized Processing Center ("CPC") while processing the return of income under section 143(1) of the Act has proposed an adjustment of Rs. 1,00,36,584/-(i.e. Rs.1,28,57,142/- less Rs. 28,20,558/- being amount of deduction reported in Form 10DA of AY 2022-23) under section 143(1)(a)(ii) of Act as under:

Against the above proposed adjustment, the assessee has filed response as under: "The Assessee hereby submits that the Assessee has rightly claimed the deduction under section 80JJAA amounting to Rs. 1,28,57,142/- and details of the same are furnished while filing Form 10DA of AY 2023-24. Further we hereby submit that Form 10DA was signed on 15 September 2023 (bearing UDIN 23102939BGWNEL6500) which is within the due date specified in section 80JJAA of the Income-tax Act, 1961. In view of the above, the Assessee hereby requests Your Goodself to kindly delete the proposed adjustment".

It was submitted that thereafter, the return of income of the assessee was processed by the CPC and intimation under section 143(1) of the Act was issued to the assessee. It was submitted that on perusal of the aforesaid intimation, the assessee has observed that the CPC has not considered the response filed by the assessee on 22-12-2023 and has disallowed the deduction claimed under section 80JJAA of the Act amounting to Rs. 1,28,57,142/-merely on the ground that the Form 10DA has not been filed within the due date as mentioned in section 80JJAA of the Act without appreciating the fact that Form 10DA was physically signed on 15-09-2023 which is before the due date of filing as per section 80JJAA(2)(c) of the Act. Being aggrieved by the above additions/disallowances, the assessee filed appeal before the ld CIT(A) who has sustained the findings of the CPC and the assessee is now in appeal before us.

In the aforesaid factual background, it was submitted by the Ld.AR that the assessee satisfied all the conditions and is eligible to claim deduction u/s. 80JJAA of the Act, except that of filing of on-line Form 10DA on or before the specified date. It was submitted that the Chartered Accountant has issued the certificate in Form 10DA in physical form on 15-09-2023, bearing UDIN No. 23102939BGWNEL6500, which was generated on 15-09-2023 itself which was on or before the specified date as mention in Section 80JJAA of the Act. It was submitted that the tax auditor after verifying the claim, has duly reported in Clause No.33 of Form 3CD that the assessee has claimed a deduction u/s. 80JJAA of the Act. It was further submitted that the Form 10DA though inadvertently filed after the date specified u/s. 80JJAA of the Act, but was on record before the CPC at the time of processing return u/s. 143(1) of the Act. It was submitted that the deduction cannot be denied to the assessee merely because on-line Form 10DA was e-filed after the due date prescribed in section 44AB of the Act; whereas the same was e-filed before filing of the return of income. It was submitted that delay in filing of Form 10DA on- line before the specified date cannot be a reason for denial of deduction u/s. 80JJAA of the Act. Further, reliance was placed on the decision of the Co-ordinate Bench of the Tribunal in case of Sai Computers Ltd. vs. ACIT-CPC [2023] 155 taxmann.com 607 (Delhi-Trib); wherein the Co- ordinate Bench has allowed the deduction u/s. 80JJAA of the Act even though the Form 10DA was filed after the date of filing return of income, but before the date of intimation, holding that the requirement of Rule 19AB and Rule 12(2) are not mandatory per se but are essentially directory in nature. It was submitted that similar findings were recorded by the Co- ordinate Bangalore Bench of the Tribunal in case of Jeans Knit (P.) Ltd. vs. DCIT [2022] 138 taxmann.com 480 (Bangalore-Trib). Further, specific reference was drawn to the decision of the Co-ordinate Ahmedabad Tribunal in case of Akuntha Projects (P.) Ltd. Vs. Deputy Director-CPC [2024] 162 taxmann.com 861 (Ahmedabad-Trib); wherein the relevant findings reads as under: “9. Accordingly, looking into the instant facts, and the decisions of the Hon'ble Supreme Court and jurisdictional Gujarat High Court referred to above, we are of the considered view that the claim of the assessee appellant for deduction under Section 80JJA of the Act cannot be denied for the reason that firstly, the chartered accountant of the assessee had uploaded Form 10DDA before the due date of filing of return of income, and it was only because of procedural lapse/mistake on the part of the appellant/assessee that the aforesaid form could not be accepted before the due date of filing of return of income, secondly, the assessee appellant had duly accepted the Form 10DDA before the return of income was processed by the CPC on 16.03.2023, thirdly, the Gujarat High Court, has on similar facts observed that although the furnishing of report for claiming the deduction/exemption is mandatory requirement, the mode and stage of filing thereof is a procedural aspect and if the requisite audit report is available with the assessing officer before the assessment order is framed, then the claim of deduction cannot be denied to the assessee/appellant, even if the audit report may not have been filed along with the return of income.”

Further, reliance was placed on the decision of the Co-ordinate Ahmedabad Bench in case of Sunrise Industries (India) Ltd., vs. DCIT in , dt. 21-05-2025; wherein the relevant findings reads as under: “7. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the CIT(A) has categorically mentioned in para 4.4 that the CBDT has authority to grant condonation for delay in Form 10DA and not that of CIT(A). But looking to the circumstances of the case and the decision taken by the Tribunal as well as the ratio followed by Hon'ble Supreme Court and Gujarat High Court, the claim of the assessee for deduction u/s. 80JJAA of the Act cannot be denied only for the reason that the assessee has uploaded Form 10DA after the due date prior to 30 days from the filing of the return of income. The assessee has filed the Form along with the filing of return of income. Thus, it is mere lapse on part of the assessee on the procedural aspects, the assessee cannot be denied the claim of deduction which the assessee is entitled if he would have filed Form 10DA within the stipulated time. allowed.”

Per contra, the Ld.DR drawn our reference to the findings of the Ld.CIT(A) and it was submitted that the Ld.CIT(A) after referring to the provisions of section 80JJAA, Rule 19AB, provisions of section 44AB of the Act as well as Rule 12(2) of the Rules has held that the assessee is supposed to furnish Form 10DA electronically one month prior to the due date before furnishing return of income in sub-section (1) of section 139 of the Act and given that the due date for filing the return of income in the instant case was 31-10-2023, the assessee was supposed to file Form 10DA on or before the 30th Sept. 2023; whereas the assessee has actually e-filed Form 10DA on 9th October. 2023. Accordingly, the Ld.CIT(A) has rightly sustained the disallowance of deduction claimed by the assessee u/s. 80JJAA of the Act. It was accordingly submitted that there is no infirmity in the findings of the Ld.CIT(A) and hence the same be confirmed and the appeal of the assessee be dismissed.

We have heard the rival contentions and perused the material available on record. The undisputed facts emerging from the records are that the Chartered Accountant has issued Form 10DA on 15-09-2023 which was uploaded by the assessee on the e-fling portal on 09-10-2023, the claim of deduction has been reported by the Tax auditor in Form 3CA r/w Form 3CD e-signed and e-filed on 29-09-2023, thereafter, the assessee in its return of income filed on 31-10-2023 has claimed deduction u/s 80JJA, and thereafter, the CPC has proposed the adjustment on 23-11-2023 and processed the return of income and intimation u/s 143(1) has been issued on 10-05-2024. Therefore, both at the stage of proposed adjustment and at the time of processing of the return of income, Form 10DA was available on e-filing portal. Infact, it is not even the case of the Revenue that Form 10DA was not available at the time of proposed adjustment and processing of return of income by the CPC. Therefore, is it really a case of incorrect claim as apparent from return of income as contemplated u/s 143(1)(a)(ii) where the claim in the return of income is substantiated by the relevant information in Form 10DA available on record. In any case, once the assessee has responded to the proposed adjustment, there is no finding recorded by the CPC in this regard and the adjustment has been finally done.

Having said that the limited dispute relates to the fact that Form 10DA which was supposed to be e-filed on or before 30-09-2023 has been e-filed by the assessee on 09-10-2023 and basis such delay of 9 days, can the claim of deduction u/s 80JJA be denied to the assessee while processing the return of income u/s 143(1) of the Act. In other words, how the due date of filing of Form 10DA should be construed – whether it calls for a literal and stricter interpretation and irrespective of period of delay, it would result in denial of claim of deduction which the assessee is otherwise eligible for or whether it should be construed liberally taking into consideration facts and circumstances of each case. We find that the Courts and the Coordinate Benches of the Tribunal have consistently held that the filing of the audit report is mandatory condition for claim of the deduction, at the same time, the mode and stage of filing of the audit report is a procedural aspect and so long as the audit report is available at the time of processing of return of income or at the time of framing of the assessment, the delay in filing the audit report is not fatal so as to deny the claim of deduction so made by the assessee. We fully subscribe to the said reasoning and in that view of the matter, we are of the considered opinion that the due date of filing of Form 10DA should be construed liberally. The instant case, we find, is clearly on a better footing where Form 10DA was available on record not just at the time of processing of return of income but well before the filing of the return of income and therefore, there is no justifiable and legal basis to deny claim of deduction to the assessee.

In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the assessee cannot be denied its claim of deduction u/s 80JJA of the Act and the same is hereby directed to be allowed.

In the result, the appeal of the assessee is allowed.