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Facts
The Revenue appealed against the order of the CIT(A) who deleted the disallowance of deduction under Section 80IA made by the AO. The assessee had filed its ROI and the assessment was completed. Subsequently, reassessment orders were passed. The primary issue revolved around the filing of Form 10CCB.
Held
The Tribunal held that the filing of Form 10CCB is directory and not mandatory. Since the assessee had filed the form before the completion of assessment proceedings, it constituted sufficient compliance. The Tribunal relied on various High Court and Supreme Court decisions.
Key Issues
Whether the filing of Form 10CCB is mandatory or directory for claiming deduction under Section 80IA, and if directory, whether filing before the completion of assessment is sufficient compliance.
Sections Cited
80IA, 143(3), 263, 142(1), 288, 46A
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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI AMITABH SHUKLA
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 31.08.2024 for the Assessment Year (hereinafter referred to as "AY”) 2010-11.
At the outset, the Revenue’s appeal, is delayed by ‘28’ days, for which, the ACIT has filed an affidavit seeking condonation of delay, to which, the Ld.Counsel of the assessee has not raised any serious objection. Consequently, the delay of ‘28’ days in filing of the appeal stands condoned and the appeal filed by the Revenue is taken up for hearing on its merits.
The main grievance of the Revenue is against the action of the Ld.CIT(A) deleting the disallowance of deduction u/s.80IA of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) to the tune of Rs.9,28,96,203/- made by the AO.
The brief facts are that the assessee is a company which has filed its return of income (RoI) for the A.Y. 2010-11 on 22.09.2010 admitting total income at Rs.52,41,85,120/-. The case was selected for scrutiny and the assessment was completed u/s.143(3) of the Act on 01/02/2013, wherein an addition of Rs.6,11,31,937/- was made to the returned income. Subsequently, another assessment was passed on 23/09/2015 u/s.143(3) r.w.s. 263 of the Act following a revisionary directive from the Ld.Pr.CIT. Later, again the Ld.Pr.CIT found that reassessment order passed u/s.143(3)/263 was erroneous and prejudicial to the interests of revenue and he directed the AO to reassess the case with specific instructions to re-determine the quantum of deduction allowable u/s. 80- IA of the Act, in accordance with the relevant provisions of law.
Aggrieved by the order of the Ld.Pr.CIT passed u/s.263 of the Act dated 30/08/2016, the assessee filed an appeal [ITA No.2880/Mds/2016] before this Tribunal, challenging the directions issued under Section 263 of the Act. After considering the relevant fact, the Tribunal passed an order on 22.06.2017, clarifying that while passing the consequential order, the AO shall take notice of judgment of Jurisdictional Hon’ble High Court in the case of Velayudhasamy Spinning Mills Ltd. v. ACIT reported in (2012) 340 ITR 477 and pass order in conformity with the said judgment of the Hon’ble High Court. With this observation, confirmed the order of Ld.PCIT u/s.263 of the Act. Pursuant thereto, the assessee not satisfied with the action of Tribunal dated 22.06.2017, preferred appeal before the Hon’ble High Court. And the Hon'ble High Court passed an order in TCA No. 154 of 2021 dated 25.01.2021 directing/observing that "... directing the AO to apply the decision in Velyuthasamy Spinning Mills Pvt. Ltd. as well as other decisions, which the assessee may rely upon, and pass a reasoned order on merits and in accordance with law. In order to ensure that the assessee is not driven to another round of litigation, we direct the assessee to submit a detailed representation raising all contentions and refer to the decisions, which they propose to rely upon. Thereafter, the Assessing Officer shall finalize the assessment by passing a speaking order”.
Upon receipt of the order from the Hon'ble High Court, the AO issued notices u/s.142(1) of the Act, requesting the assessee to furnish relevant details from time to time. During the proceedings, the AO considered the submissions made by the assessee in light of the decision of the High Court in the case of Velyuthasamy Spinning Mills Pvt Ltd. And the AO accepted that the assessee is eligible to claim a deduction u/s.80- IA of the Act, subject to the fulfillment of other conditions prescribed therein and noted section 801A(7) and was of the view that requirement of this provision was not satisfied. Therefore, it would be gainful to reproduce section 801A(7) which reads as under:-
The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form [10CCB] duly signed and verified by such accountant
According to the AO, since the assessee neither submited Form- 10CCB along with their RoI nor during the assessment proceedings u/s.143(3) of the Act, he rejected the assessee’s claim for deduction of Rs.9,28,96,203/- u/s 80-IA of the Act. The AO is noted to be of view that filing of Form 10CCB, (Audit Report) is mandatory and needed to be filed along with RoI in order to claim the deduction u/s. 80-IA. Since this requirement was not met, the AO concluded that the assessee wasn’t eligible for the deduction.
Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who has made a finding of fact that the assessee had filed Form No.10CCB [statutory Audit Report] required for claiming deduction u/s.80IA of the Act on 12.09.2012 well before the AO completed the assessment proceedings u/s.143(3) of the Act on 01.02.2013. This finding of fact is noted to have been given by the Ld CIT(A) after taking notice that assessee had filed a copy of the acknowledgement/receipt [copy of which has been reproduced by the Ld.CIT(A) at Page Nos.9-10 of his order], which shows that the assessee has duly filed Form No.10CCB on 12.09.2012, which was an event, well before the assessment u/s.143(3) was framed on 01.02.2013 and consequently, he allowed the deduction claimed u/s.80IA of the Act.
Aggrieved by the action of the Ld.CIT(A), the Revenue is before us.
We have heard both parties and perused the records. The facts narrated above are not disputed. The only dispute is whether filing of Form 10CCB (Audit Report) is mandatory or directory; and if the answer to this question is that, it is not mandatory, but only directory, then in such an event, if assessee files Form 10CCB before completion of assessment, then that would be sufficient compliance, to grant deduction u/s.80IA of the Act. In this regard, it is noted the issue raised is no longer res integra. The Hon'ble Jurisdictional High Court, in CIT vs AKS Alloys (P)
Ltd [2012] 205 Taxman 11 held that filing of audit-report along with the return was not mandatory, but directory and that if the audit report was filed at any time before the framing of assessment, the requirement of the provisions of the Act should be held to have been met. In the case of M/s Ramani Realtors (P) Ltd [2015] 54 taxmann.com 321 (Madras), the Hon’ble High Court, concurred with the view (supra) that non-filing of Form 10CCB along with the return of income does not disqualify the claim under Section 80-IA, as long as the form is furnished during the assessment proceedings. Having noted the binding decision of the Jurisdictional High Court (supra) on the issue in hand, we note that the Ld CIT(A) has found that the assessee had filed Form 10CCB (Audit Report) on 12.09.2012 before the assessment was framed by the AO on 01.02.2013. And the Ld.CIT(A) is noted to have taken notice of the relevant Circular No.3/2009 issued by the CBDT on 25.05.2009, which clarifies that the statutory audit report or certificate required under various provisions of the Act, including Section 80-IA, need not be filed along with the return of income, but can be submitted subsequently when specifically called for by the Department. The Ld.CIT(A) has examined the relevant documents and held that the assessee has complied with the requirement of CBDT Circular (supra) by filing Form 10CCB during the assessment proceedings i.e., before assessment was framed; and therefore, the Ld.CIT(A) rightly allowed the deduction u/s.80IA of the Act.
In this regard, it would be gainful to refer to the relevant judicial pronouncements of the Hon'ble Supreme Court and the Jurisdictional High Court, which are noted as under:-
(i) The Hon'ble Supreme Court, in CIT v. G.M. Knitting Industries (2016) 71 taxmann.com 35 (SC), categorically held that the failure to furnish the audit report along with the return of income is not a valid ground to deny the deduction under Section 80-IA, provided that the audit report is submitted before the completion of the assessment. The Apex Court emphasized that procedural lapses should not be allowed to impede substantial justice, particularly when the substantive requirement of filing the audit report within the statutory timeframe has been met during the assessment. (ii) The Hon'ble [2015] 54 taxmann.com 321 (Madras), reinforced the principle that non-filing of Form 10CCB along with the return of income does not disqualify the claim under Section 80-IA, as long as the form is furnished during the assessment or appellate proceedings. The Court clarified that the requirement of filing the audit report is directory, not mandatory, and compliance before the finalization of the assessment suffices to meet the legal obligations.
In the light of the discussion (supra), we are of the view that the assessee has complied with the substantive requirement of law for claiming deduction including filing of the Audit Report before completion of the assessment and that mere delay in filing of Form No.10CCB should not be a fetter for disallowing the legitimate claim. The finding of fact returned by the Ld.CIT(A) that the assessee had filed Form No.10CCB during the course of assessment proceedings, couldn’t be controverted by the department. Therefore, relying on the Hon’ble Supreme Court decision in the case of CIT v. GM Knitting Industries [2016] 71 taxmann.com 35 [SC] and the Hon’ble Madras High Court in the case of Jayant Patel v. CIT reported in [2001] 117 Taxman 207 (Madras), we find no infirmity in the action of Ld CIT(A) allowing the deduction claimed u/s.80IA of the Act.
For completeness, we would like to observe that there is no violation of Rule 46A of the Income Tax Rules, 1962 since the acknowledgment given by the department when assessee filed Form No.10CCB on 12.09.2012 can’t be termed as new evidence since it only shows/proves that the assessee has filed Form No.10CCB before the AO.
The acknowledgment given by the department can’t at any rate by termed as new evidence produced by assessee because it is generated by the department when assessee uploaded the ibid Form and a perusal of the same, reveals that assessee had filed the Form 10CCB on 12.09.2012 before the AO. Therefore, the document which is already filed before the AO as early as on 12.09.2012 and which should be part of the assessment record, can’t be termed as new evidence filed by the assessee and therefore, there is no question of violation of Rule 46A and therefore, such a ground of the Revenue is devoid of merits and dismissed.
In the result, appeal filed by the Revenue is dismissed. Order pronounced on the 23rd day of April, 2025, in Chennai.