M/S ROOPA STEAM CALENDERING WORKS,TIRUPUR vs. DCIT,CPC, BENGALURU

Per Mahavir Singh, Vice President :

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).

“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.

6. 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 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.

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.

8. 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.”

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 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.”

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.

Order pronounced in the Open Court on 18th August, 2022.