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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGHAND DR. DIPAK P. RIPOTE
Per Mahavir Singh, Vice President : This appeal by the assessee is arising out of the order of Commissioner of Income Tax, National Faceless Appeal Centre
(NFAC), Delhi, in Appeal No.CIT(A), Coimbatore-3/10080/2019-20
dated 26.03.2019. The Assessment was framed by Dy. Commissioner of Income Tax, Centralized Processing Center, Bengaluru for the
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relevant Assessment Year 2017-18 vide intimation dated 23.03.2019
u/s. 143(1) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee is as regards to the
order of CIT(A) confirming the action of the A.O i.e., DCIT, Centralized
Processing Center, Bengaluru in disallowing the claim of deduction
u/s. 80-IA of the Act amounting to Rs. 35,58,840/- and that also while
adjudicating the return of income u/s. 143(1) of the Act and without
jurisdiction.
The brief facts of the case are that the assessee is engaged in
the business of manufacture and export of hosiery garments. The
assessee filed its return of income for the A.Y 2017-18 on 31.10.2017.
The A.O while processing return of income u/s. 143(1) of the Act vide
order dated 23.03.2019 disallowed the claim of deduction claimed by
assessee u/s. 80IA of the Act amounting to Rs. 35,58,840/-. In this
intimation issued u/s. 143(1) of the Act by the A.O, no reason was
assigned except making disallowance u/s. 80-IA of the Act as claimed
by the assessee. Aggrieved, the assessee preferred appeal before
CIT(A).
The CIT(A) noted that the assessee had obtained the audit
report in Form No.10CCB on 13.11.2017, whereas, the return of
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income was filed on 31.10.2017 and thus, at the time of making of
claim of deduction u/s. 80-IA of the Act, the return of income was not
accompanied by the mandatory audit report as prescribed in Form
No.10CCB and thus, the A.O, CPC, Bengaluru has rightly disallowed
the claim of the assessee. For this, the CIT(A) observed as under:
“5…………………………………………………………………………………… ……………………………………………………………………………………… On perusal of relevant details, it is apparent that the assessee had obtained the audit report in form 10CCB on 13.11.2017 and return of income was filed by the assessee on 31.10.2017. Thus, at the time of making the claim of deduction u/s 80IA of the Act in the return of income, the assessee did not have the mandatory report in the prescribed form 10CCB. As the appellant had not obtained the audit report at the time of claiming deduction u/s. 80IA, the assessee is not entitled to deduction u/s 80IA of the Act. The Appellant relied upon certain judgment as narrated in the reply, the fact of each case are different than the Facts of the Appellant's case as discussed above. Even filing of audit report for deduction u/s 80IA of the IT Act along with return of income is mandatory and not directory and in case of failure to file the audit report along with the return of income, the assessee is not entitled to deduction. This view is found support from the judgment of the Hon'ble Rajasthan High Court in the case of CIT vs. Jyoti Jain (2009) 17 DTR (Raj) 286. In the circumstances, I don't intend to interfere in the decision taken by the AO which is as per provisions of the Act. Accordingly, Ground No, 1 to 3 of appeal are dismissed.”
Aggrieved, now the assessee is in appeal before us.
We have heard the rival contentions and gone through the facts
and circumstances of the case. We have perused the case records
including the intimation issued u/s. 143(1) of the Act by the A.O, CPC,
Bengaluru dated 23.03.2019. Admitted facts are that the assessee
filed e-return of income on 31.10.2017 and claimed deduction u/s. 80-
ITA No.284/Chny/2022 :- 4 -:
IA of the Act amounting to Rs. 35,58,840/-. During the course of
hearing before us, the Ld. Counsel for the assessee also filed
evidence regarding obtaining of audit report in Form No.10CCB on
13.11.2017 and filing of the same with the Income Tax Department
through email. The evidence was placed before us during the course
of hearing. It means that the audit report is filed, no doubt by delay of
6 or 7 days of the due date of filing of the return of income, but
subsequently on 13.11.2017. The CIT(A)’s entire emphasize was that
the assessee is not entitled for the claim of deduction for the reason
that filing of audit report along with the return of income is mandatory
and not directory and in case of failure to file the audit report along
with the return of income, the assessee is not entitled for the claim of
deduction u/s. 80-IA of the Act. The CIT(A) relied on the judgment of
Hon’ble Rajasthan High Court in the case of CIT vs. Jyoti Jain [2009]
17 DTR (Raj.) 286.
The Ld. Counsel for the assessee on this preposition relied on
the decision of Hon’ble Supreme Court in the case of CIT v. G.M.
Knitting Industries (P.) Ltd. [2015] 376 ITR 456 (SC), wherein the
Hon’ble Supreme Court held that even though necessary certificate in
Form No.10CCB has to be filed along with the return of income, but
even if the same was filed before the final order of assessment was
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made, assessee is entitled to claim deduction u/s. 80IB of the Act.
The Hon’ble Supreme Court affirmed the order of Hon’ble Madras High
Court in the case of CIT v. AKS Alloys (P.) Ltd. [2012] 18
taxmann.com 25 (Mad.) . The Ld. Counsel for the assessee has also
filed a copy of Hon’ble Madras High Court decision in the case of CIT
v. AKS Alloys (P.) Ltd., supra, wherein the same issue was considered
and held as under:
“5. In so far as it relates to the substantial question of law (1) is concerned, namely, whether the filing of audit report in Form 10CCB is mandatory, it is well settled by a number of judicial precedents that before the assessment is completed, the declaration could be filed. In fact, the said issue came to be decided by the Karnataka High Court in the case in CITv. ACE Multitaxes Systems (P.) LTD. [2009] 317 ITR 207 (Kar.), wherein it was held that when a relief is sought for under Section 80IB of the Act, there is no obligation on the part of the assessee to file return accompanied by the audit report, thereby, holding that the same is not mandatory. Therefore, it is clear that before the assessment is completed if such report is filed, no fault could be found against the assessee. That was also the view of the Delhi High Court in the case in CIT v. Contimeters Electricals (P.) Ltd. [2009] 317 ITR 249/ 178 Taxman 422 (Delhi), wherein the Delhi High Court, by following the judgements of the Madras High Court in CIT v. A.N. Arunachalam [1994] 208 ITR 4.8.1. / 75 Taxman 529 and in CIT v. Jayant Patel [2001] 248 ITR 199/ 117 Taxman 707 (Mad.) held that the 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 the assessment, the requirement of the provisions of the Act should be held to have been met. 6. That is also the consistent view of the other High Courts, including the High Court of Bombay in CIT v. Shivanand Electronics [1994] 209 ITR 63 / 75 Taxman 93 (Bom.), apart from Gujarat High Court in Zenith Processing Mills v. CIT [1996] 219 ITR 721 (Guj.) and Punjab and Haryana High Court in CIT v. Mahalaxmi Rice Factory [2007] 294 ITR 631/ 163 Taxman 565 (Punj. & Har). 7. The Calcutta High Court in the case in the CIT v. Berger Paints (India) Ltd. [2002] 254 ITR 503/[2Q031 126 Taxman 435 (Cal.) has also concurred with the said view which was followed by the Tribunal in this case.
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Mr. T. Ravikumar, the learned counsel for the appellant is not able to produce any other judgement contrary to the above said views consistently taken. 9. In the light of the above, by virtue of hierarchy of judgements which are against the Revenue, the substantial question of law (1) would not arise at all for consideration.”
On the other hand, the Ld. Sr. D.R relied on the decision of
Hon’ble Supreme Court in the case of PCIT v. M/s. Wipro Ltd. in Civil
Appeal No.1449 of 2022 dated 11.07.2022 (SC).
We have noted the fact that admittedly the assessee has filed
return of income claiming deduction u/s. 80IA of the Act on
31.10.2017, but audit report in Form No.10CCB for claiming deduction
u/s. 80-IA of the Act was filed on 13.11.2017 and the evidence of the
same was placed on record. The processing of return u/s. 143(1) of
the Act was done by the A.O, CPC, Bengaluru and issued intimation
dated 23.03.2019, which is much after the filing of audit report. Once,
this is a fact, this issue is clearly covered by the decision of Hon’ble
Madras High Court in CIT v. AKS Alloys (P.) Ltd., supra, and which
was affirmed by the Hon’ble Supreme Court in the case of CIT v. G.M.
Knitting Industries (P.) Ltd., supra. We have also gone through the
case law of Hon’ble Supreme Court in the case of PCIT v. M/s. Wipro
Ltd., supra, wherein the Hon’ble Supreme Court has categorically
made distinction between the exemption clauses and deduction
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clauses of the Act and this distinction is marked in Para 11 of the
order, which reads as under:
“11. Now so far as the reliance placed upon the decision of this Court in the case of G.M. Knitting Industries Pvt. Ltd. (supra), relied upon by the learned counsel appearing on behalf of the assessee is concerned, j Section 10B (8) is an exemption provision which cannot be compared with claiming an additional depreciation under section 32(1) (ii-a) of the Act. As per the settled position of law, an assessee claiming exemption has to strictly and literally comply with the exemption provisions. Therefore, the said decision shall not be applicable to the facts of the case on hand, while considering the exemption provisions. Even otherwise, Chapter III and Chapter VIA of the Act operate in different realms and principles of Chapter III, which deals with "incomes which do not form a part of total income", cannot be equated with mechanism provided for deductions in Chapter VIA, which deals with "deductions to made in computing total income". Therefore, none of the decisions which are relied upon on behalf of the assessee on interpretation of Chapter VIA shall be applicable while considering the claim under Section 10B (8) of the IT Act.”
From the above, taking into consideration this decision of
Hon’ble Supreme Court in the case of PCIT v. M/s. Wipro Ltd., supra,
and the judgment of Hon’ble Madras High Court in the case of CIT v.
AKS Alloys (P.) Ltd., supra, we are of the view that once the assessee
has filed an audit report in Form No.10 CCB on 13.11.2017 and
processing of return u/s. 143(1) of the Act was done by the A.O, CPC,
Bengaluru on 23.03.2019, which is an event much after, the assessee
is fully entitled to claim deduction u/s. 80-IA of the Act. We hold so.
Accordingly, the orders of the lower authorities are set aside and claim
of deduction u/s. 80-IA of the Act of the assessee is allowed. Thus,
the appeal of the assessee is allowed.
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In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 18th August, 2022.
Sd/- Sd/- (डॉ दीपक पी. �रपोटे) (महावीर िसंह) (Dr. Dipak P. Ripote) (Mahavir Singh) उपा�� / Vice President लेखा लेखा सद�य लेखा लेखा सद�य सद�य /Accountant Member सद�य चे�ई/Chennai, �दनांक/Dated: 18th August, 2022. EDN/-
आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु� (अपील)/CIT(A) 4. आयकर आयु�/CIT 5. िवभागीय �ितिनिध/DR 6. गाड� फाईल/GF