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Facts
The assessee, engaged in manufacturing steel and alloy steel castings, filed its return of income and a revised return. The AO proposed adjustments regarding a disallowance of deduction under Section 80-IA due to Form 10CCB not being filed timely and disallowing employee PF/ESI contributions not credited by the due date. The assessee contended these were inadvertent mistakes and technical glitches.
Held
The Tribunal found that the assessee's revised return was valid and condoned the delay in filing the appeal due to medical reasons. The issue regarding the eligibility for deduction under Section 80-IA, linked to the timely filing of the audit report in Form 10CCB, was remanded to the AO for re-examination in light of the Supreme Court's decision in CIT vs. G M Knitting Industries (P) Ltd.
Key Issues
Whether the deduction under Section 80-IA is allowable when the audit report in Form 10CCB is filed belatedly, and whether employee PF/ESI contributions paid before filing the return are deductible.
Sections Cited
143(1)(a), 139(1), 139(5), 80-IA, 80AC
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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”, HYDERABAD
Before: SHRI LALIET KUMAR, Hon’bleSHRI MANJUNATHA. G. Hon’ble
O R D E R PER MANJUNATHA. G, A M: This appeal filed by the assessee is directed against the order of learned ADDL/JCIT (Appeals)-2, Chennai passed on 03- 10-2023 for the assessment year 2018-19.
The appeal filed by the assessee is time barred by 368 days. The assessee has filed a petition for condonation and also filed affidavit and explained the reasons. After hearing from both sides,
2 ITA 6/Hyd/2025 we find that the medical reasons given by the assessee for condonation of delay in filing the appeal does come under reasonable cause and thus, we condone the delay of 368 days in filing appeal admit appeal for disposal.
The brief facts of the case are that the assessee Company is engaged in the business of manufacture of steel and alloy steel castings. It has filed its original return of income on 31-10-2018 and said return of income was revised and filed on 2-11-2018 admitting total income of Rs.22,87,460. The appellant received a communication proposing to make adjustments u/s.143(1)(a), wherein a proposal is made to make adjustment by adding in Schedule B P of Rs.71,764 on the ground that it is more in value than the rows 1( a)(b)(c) and (d), and further that Schedule VIA deduction claimed u/s .80-IA is proposed to be disallowed on the ground that Form 10CCB is not filed. It has also proposed to disallow expenditure of contribution by employees to PF and ESI not credited to employees account within the due date. The appellant responded by submitting that there was an inadvertent mistake in filling the return and thereby in a wrong row the income was mentioned. Similarly, it was also submitted that due to technical glitch the audit report was not uploaded and the same is uploaded and with regard to contribution of PF and ESI by the employees was credited before filing of return of income. For the later two issues the appellant has also referred to the decisions wherein it is held that deduction is to be allowed even where the 3 ITA 6/Hyd/2025 audit report is submitted during the assessment proceedings and the ESI and PF contribution is to be allowed if paid before filing of return of income. The CPC, however, made the adjustments and passed orders, determining the income at Rs.45,94,880.
Aggrieved with the order of ld. AO, CPC, the assessee filed appeal before the CIT(A) and challenged addition towards disallowance of deduction u/s 801A and contribution to PF and ESI. The Addl/JCIT appeals, for the reasons stated in their appellate order, upheld the addition made by the AO and dismissed the appeal.
Aggrieved by the order of Addl/JCIT appeal, the assessee is now in appeal before the Tribunal.
The ld. Counsel for the assessee submitted that the ld. CIT(A) is erred in sustaining the addition towards disallowance of deduction u/s 80IA of the Income Tax Act, 1961, even though the assessee has satisfied conditions for claiming such deduction. He, therefore, submitted that the issue may be decided in favour of the assessee.
4 ITA 6/Hyd/2025
The ld. Sr. AR, supporting order of the ld. CIT(A) submitted that the assessee has FILED RETURN OF INCOME ALONG WITH Form 10CCB beyond due date provided u/s 139(1) and therefore, not eligible for deduction. The Addl/JCIT appeals after considering relevant facts has rightly upheld the addition and thus, their order should be upheld.
We have heard both the parties, perused materials on record and gone through orders of the authorities below. There is no dispute with regard to fact that the assessee has filed original return of income on 31-10-2018, which is on or before due date u/s 139(1) of the Act. It is also an undisputed fact that revised return filed on 02-11-2018 is a valid return in terms of section 139(5) of the Act. Therefore, once the revised return is a valid return it replaces the original return of income and is deemed to be filed on or before due date u/s 139(1) of the Act. If, the assessee filed return of income as per section 139(1), then the assessee is eligible for deduction u/s 80IA of the Act, provided other conditions are satisfied. In the present case, the objection of the AO is belated filing of an audit report in Form 10CCB and according to AO said form is filed on 02-011-2018 is beyond due date and therefore, the assessee is not eligible for deduction u/s 80IA of the Act. The counsel for the assessee referred to the judgment of Hon’ble Supreme Court in the case of CIT vs. G M Knitting Industries (P) Ltd(2015) 376 ITR 456 (SC) and submitted
5 ITA 6/Hyd/2025 that filing audit report in Form 10CCB is not mandatory and it is directory, and if, such audit report is filed before the AO passes assessment order, then deduction should be allowed. We, find that whether, assessee is eligible for deduction u/s 80IA of the act or not needs further verification. Therefore, we are of the considered view that the issue needs to be re-examined by the AO in light of provisions of section 80IA r.w.s 139(1) r.w.s 80AC and also, the judgment of the Hon’ble Supreme Court in the case of CIT vs. G M Knitting Industries (P) Ltd (Supra) and decide the issue of deduction u/s 80IA of the Act. Therefore, we set aside the issue to the file of AO for reconsidering the issue in light of our discussion given hereinabove, after providing reasonable opportunity of hearing to the assessee.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the Open Court on 4th February 2025.