DCIT-4(1), INDORE, INDORE vs. ODDIVILLE FOODS AND FROZEN, INDORE

आदेश/ O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by order of first appeal dated 12.03.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 28.03.2024 passed by learned DCIT/ACIT-4(1), Indore [“AO”] u/s 143(3) r.w.s. 263 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2018-19, the revenue has filed this appeal on following grounds:

“1. That on facts and circumstances of the case and in law, the Id. CIT(A) has erred in deleting the disallowance of deduction u/s 35AD of Rs. 8,60,92,253/- without appreciating the findings of AO that as the assessee Page 1 of 16

Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 has failed to file Form 10CCB before the due date of filing of return of income, the assessee is not eligible for claiming deduction u/s 35AD of the Act. 2. That on facts and circumstances of the case and in law, the Id. CIT(A) has erred in directing the Assessing Officer to recompute the income of the assessee firm u/s 115JC after considering the deduction u/s 35AD without appreciating the findings of AO that as the assessee has failed to file Form. 10CCB. before the due date of filing of return of income, the assessee is not eligible for claiming deduction u/s 35AD of the Act and thus income u/s 115JC is not required to be recomputed (Please refer ground no.1). 3. The appellant craves leave to add to or deduct from or otherwise amend the above.”

(i) The assessee is a partnership firm engaged in the business of building

and operating a cold storage in which fruits and vegetables are

processed through scientific technology and refrigeration and storing

them in controlled conditions to increase the product self-life.

(ii) For AY 2018-19, the assessee filed return declaring a loss of Rs.

7,73,47,127 / total income of Rs. Nil. In the return so filed, the

assessee claimed deduction of Rs. 8,60,92,248/- u/s 35AD.

(iii) The case of assessee was subjected to scrutiny-assessment and the

AO passed assessment order dated 04.02.2021 u/s 143(3) by

accepting the loss / total income declared by assessee without any

variation. The AO allowed deduction u/s 35AD as claimed by assessee.

(iv) Subsequently, the Ld. PCIT-1, Indore [“PCIT”] passed revision-order

dated 26.03.2023 u/s 263 of the Act holding that the assessment-

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 order passed by AO was erroneous-cum-prejudicial to the interest of

revenue for the reason that the assessee did not file report in Form No.

10CCB for claiming deduction u/s 35AD but the AO allowed

deduction without making necessary enquiry or investigation in this

regard. The Ld. PCIT set aside the assessment-order passed by AO

and directed the AO to re-examine issue and pass assessment-order

afresh after making necessary verification, inquiries and investigations.

(v) Pursuant to PCIT’s direction, the AO resumed proceeding of fresh

assessment and passed order of fresh assessment dated 28.03.2024

u/s 143(3) r.w.s. 263. In this proceeding of fresh assessment, the

assessee filed Form No. 10CCB on 08.02.2024. Further, the assessee

also filed a detailed reply to AO qua the claim of deduction u/s 35AD

which the AO has re-produced in Para No. 3.5 of order of fresh

assessment. However, vide para 4 of order, the AO rejected assessee’s

claim of deduction u/s 35AD by citing the reason that the assessee

did not file statutory report in Form 10CCB till the due date of filing

return of income as required by section 35AD r.w.s. section 80-IA,

rule 18BBB and proviso to rule 12(2). Accordingly, the AO disallowed

assessee’s claim of deduction of Rs. 8,60,92,248/- u/s 35AD and re-

determined total income at Rs. 87,45,121/-. Further, the AO re-

determined deemed total income of assessee u/s 115JC at Rs.

31,90,021/- after making addition for disallowance u/s 35AD.

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 (vi) Aggrieved, the assessee carried matter in first-appeal before CIT(A).

The CIT(A), after being satisfied with submissions of assessee,

reversed AO’s action and directed the AO to allow deduction u/s 35AD

and accordingly deleted the addition of Rs. 8,60,92,253/- from normal

total income and also re-computed the deemed total income u/s

115JC.

(vii) Now, the revenue being aggrieved by order of CIT(A) has come in next

appeal before us.

vehement contentions in favour of respective orders i.e. while the Ld. DR for

revenue/appellant has defended the assessment-order passed by AO, the Ld.

AR for assessee/respondent has supported the order of first-appeal passed

by CIT(A). We have heard learned Representatives of both sides and

carefully considered the material held on record including the orders of

lower-authorities and the documents filed in Paper-Books.

CIT(A) giving relief to assessee, which also includes the facts of assessee as

well as relevant portion of assessment-order passed by AO:

“1. Decision 7.1 I have carefully considered the submission of the appellant as reproduced in the preceding paragraphs and the facts emanating from the AO's order, wherein addition has been made. In this regard my decision on various Grounds of appeal are as under:

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 In this case, assessee is engaged in the business of building and operating a cold storage in which fruits and vegetables were processed through scientific technology and refrigeration and storing them in controlled condition in cold storage. Assessee firm has started this business in A.Y. 2018-19 only and claimed deduction of Rs. 8,60,92,253/- u/s. 35AD of the Income-tax Act. Thereafter, case was selected for complete scrutiny and assessment order u/s.143(3) has been passed on 04.02.2021 by accepting the returned income of the assessee. Afterwards, case was selected for revision by Hon'ble PCIT u/s. 263 of the Act on the ground that Assessing Officer has not taken into consideration the detailed examination of deduction u/s. 35AD claimed by assessee. During the 263 proceedings, Hon'ble PCIT has set aside the issue of deduction u/s. 35AD and non-filing of Form 10CCB, to the file of Assessing Officer for making necessary enquiry and investigation in this regard. Assessing Officer has examined the issue in detail as per the directions given by Hon'ble PCIT in his order u/s. 263 and disallowed assessee's claim u/s. 35AD only on the ground that assessee has failed to submit Form 10CCB before assessment. Relevant extract of A.O's order u/s. 143(3) r.w.s 263 dated 28.03.2024, is reproduced below: "The proviso to rule 12(2) makes it mandatory to furnish Form 10CCB electronically but the assessee has failed in doing so. It is well settled that when the statute is clearly worded and in unambiguous terms, it has to be implemented literally. It is also a fact that the assessee has not filed/uploaded Form 10CCB by the due date. As per section 35AD read with section 801A read with rule 18BBB. the assessee was required to upload Form 10CCB by the due date of filing of return of income. The assessee has admittedly failed in doing so. In light of the fact that the provision of law is unambiguous and does not allow for a liberal interpretation the deduction claimed u/s 35AD for Rs 8,60,92,248/- is disallowed in computation of income for the year." Assessee firm has challenged this addition and made detailed factual submissions along with judicial pronouncements in this regard, which have already been reproduced above. From the submissions made by assessee, following conclusions can be drawn: Ground Nos. 1 to 3 1. Assessee firm's case was selected for complete scrutiny as evident from assessment order itself, where in first para itself it has been specifically mentioned that case was selected for Complete scrutiny assessment.

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 Although this is the fact that initial issue on which the case was selected was "Share Capital/Other Capital". But, it was open to Assessing Officer to examine other issues as well, which he apparently has not done by him and hence, 263 proceedings took place. Relevant para of assessment order is reproduced as below, which clearly shows that it is a complete scrutiny assessment. ASSESSMENT ORDER "1. The case was selected for Complete Scrutiny assessment under the E-assessment Scheme, 2019 on the following issues:- S. No. Issues i. Share Capital/Other Capital" 1. During 263 proceedings, assessee firm has submitted all the details regarding 35AD deduction and also submitted that Form 10CCB is left to be e-filed along with return due to some technical glitches and it was bonafide mistake. Hon'ble PCIT has duly considered the submissions of the assessee and set aside the Issue to the Assessing Officer for making detailed enquiry regarding all aspects of Sec. 35AD deduction. 1. During proceedings u/s. 143(3) r.w.s 263, Assessing Officer has called for all the details regarding Section 35AD from the assessee, which has been duly submitted by assessee before Assessing Officer. Even during these proceedings, assessee has submitted Form 10CCB electronically on 08.02.2024, which is much before the final order passed by AO u/s.143(3) r.w.s 263 on 28.03.2024. Even AO has acknowledged the fact that assessee has submitted the Form 10CCB, in his order. In his order, AO has disallowed deduction u/s.35AD only on the ground that assessee has failed to submit Form 10CCB electronically alongwith ITR. In this regard, assessee had made submissions during assessment as well as appellate proceedings along with judicial pronouncements, by various ITAT and High Courts including of Hon'ble Madhya Pradesh High Court High Court of Madhya Pradesh, Indore Bench in the matter of CIT Vs Panama Chemical Works [2007] 292 ITR 147 (MP) and of Supreme Court in case of CIT vs. G. M. Knitting Industries (P.) Ltd. [2015] 376 ITR 456 (SC). In all these judicial pronouncements, it was clearly held that furnishing of Form 10CCB along with return of income was not mandatory provision but only directory one and accordingly Form 10CCB can be filed at any time before completion of assessment and deduction can't be denied only on the ground that certificate was not filed along with return. Further, it is evident from the submissions of the assessee and of AO's order, that assessee has filed Form 10CCB electronically before completion of assessment u/s. 143(3) r.w.s 263, which absolves assessee of his responsibility to file Form 10CCB, but Assessing Officer has wrongly overlooked and ignored this fact and various judicial pronouncements submitted by assessee during these

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 proceedings, in this regard, and made wrong decision of disallowing Sec. 35AD deduction only on the ground of non-filing of Form 10CCB. Hon'ble Supreme Court in case of CIT vs. G.M. Knitting Industries (P.) Ltd. [2015] 376 ITR 456 (SC) has held that "even though necessary certificate in Form 10CCB along with return of income had not been filed but same was filed before final order of the assessment was made, the assessee was entitled to claim deduction under section 80-IB" Further Hon'ble Madhya Pradesh High Court, which is jurisdictional High Court in case of CIT Vs Panama Chemical Works [2007] 292 ITR 147 (MP), has held that "7. We are of the view that even if an assessee fails to file information in Form No. 10CCB along with the return, he cannot be divested of the benefit of section 80-I. It is not a case where the form was filed after the assessment, but before it and, therefore, when the authorities assessed the income, the form was before the Assessing Officer. Under these circumstances, we find that the approach of the CIT(A) and the Tribunal was proper." "9. We, therefore, hold that in the facts and circumstances of the case, the Tribunal was justified in law in holding that the claim of the assessee under section 80-I is justified even if he had not filed the audit report in Form No. 10CCB along with the return. We, therefore, answer the question against the revenue and in favour of the assessee." Similar view was taken by Hon'ble ITAT Jaipur Bench in case of DCIT V/s. M/s. Ksheer Sagar Developers Private Ltd., ITA No. 1158 to 1162/JP/2019 dated 31.08.2021, wherein it was held that filing of Form 10CCB, for claiming deduction u/s. 35AD is only directory and not mandatory and deduction u/s. 35AD should be allowed even when Form 10CCB was filed before completion of assessment. From the above factual matrix and judicial pronouncements, it is clear that filing of Form 10CCB, for claiming of deduction u/s 35AD is a directory provision and not mandatory one and hence, even when Form 10CCB has been filed before completion of assessment, before Assessing Officer, which has been done in this case, deduction u/s 35AD can't be disallowed on this ground. Accordingly, Assessing Officer is directed to give relief to the assessee on this ground and delete this addition of Rs. 8,60,92,253/-. Accordingly, these grounds of appeal no.1 to 3 are hereby allowed. Ground No.4 Assessee has raised this ground as an alternative, in case deduction u/s.35AD has been disallowed, then depreciation u/s. 32 should be allowed.

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 But since in this case deduction u/s.35AD has been allowed hence, this ground of appeal becomes academic in nature and accordingly, dismissed. Ground No.5 & 6 Assessee has raised these grounds to direct Assessing Officer to make correct calculation u/s.115JC on the basis of allowability or non-allowability of deduction u/s.35AD. Since, in this case assessee's claim u/s. 35AD has been allowed, accordingly Assessing Officer is directed to recalculate income of assessee firm u/s.115JC accordingly in correct way. Accordingly, these grounds of appeal are allowed for statistical purpose. In the result, appeal of the assessee is Partly Allowed.” 5. Thus, the CIT(A) has granted relief to assessee after considering the

fact that the assessee filed report in Form No. 10CCB on 08.02.2024 before

passing of assessment-order u/s 143(3) r.w.s. 263 by AO on 28.03.2024. He

has followed the judicial view taken by various appellate forums including

the decision of Hon’ble jurisdictional High Court in CIT Vs Panama

Chemical Works [2007] 292 ITR 147 (MP) and the Hon’ble Supreme Court

in CIT vs. G.M. Knitting Industries (P.) Ltd. [2015] 376 ITR 456 (SC) holding

that if the report in Form No. 10CCB is not filed alongwith return of income

but subsequently filed before completion of assessment, that would amount

sufficient compliance and the assessee cannot be divested of the benefit of

deduction.

the original assessment u/s 143(3) was completed by AO vide order dated

04.02.2021 and the fresh assessment u/s 143(3) r.w.s. 263, pursuant to

revision-order passed by PCIT, was passed by AO on 28.03.2024. The

assessee has filed Form No. 10CCB on 08.02.2024 during the proceeding of

fresh assessment and not during the proceeding of original assessment. He

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 submitted that the decisions relied by Ld. CIT(A) including the decision of

Hon’ble Jurisdictional High Court and Supreme Court have dealt a situation

where the assessee filed Form No. 10CCB before completion of original

assessment. Those decisions did not deal a situation involved in present

case of assessee. Therefore, those decisions cannot help assessee. He also

submitted that had there been no action of revision u/s 263 by Ld. PCIT,

the assessee would have not filed Form No. 10CCB. He submitted that filing

of Form No. 10CCB is mandatory for claiming deduction.

(i) The present AY 2018-19 was the first year of operations of assessee.

The assessee obtained Form No. 10CCB on 31.03.2020 from

Chartered Accountant. However, the same was not filed inadvertently

to Income-tax Department.

(ii) The assessee, however, also obtained Report of Tax Audit (Form No.

3CD) u/s 44AB signed by its auditors-cum-Chartered Accountants,

and in Clause No. 19 of same, the auditors clearly reported ‘Amount

admissible u/s 35AD – Rs. 8,60,92,248/-’. The assessee filed copy of

this Tax Audit Report (Form No. 3CD) to Income-tax Department

before filing return of income, which is available at Pages 100-120 of

the Paper-Book.

(iii) The assessee has forgone its statutory claim of depreciation u/s 32 on

the assets for which the deduction u/s 35AD was claimed.

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 Accordingly, the auditors have excluded the assets considered for

deduction u/s 35AD in the working of depreciation admissible u/s 32.

The Ld. AR and his associate CA Mihika Maheshwari who was also

present in court during hearing, both confirmed this factual position

that the assessee has not claimed any depreciation u/s 32 on the

assets considered for deduction u/s 35AD, either in this year or in

any subsequent year. Thus, Ld. AR submitted that the assessee was

entitled to depreciation u/s 32 but for claiming deduction u/s 35AD,

the assessee waived claim of depreciation.

(iv) That, during original scrutiny assessment finalized on 04.02.2021, the

AO did not raise any query or objection about filing of Form No.

10CCB and that is why the assessee could not make any attempt or

exercise to file Form No. 10CCB at that stage although the assessee

was having Form No. 10CCB in possession.

(v) That during revision-proceeding u/s 263, when the PCIT raised the

issue of non-filing of Form No. 10CCB, the assessee made effort to e-

file Form No. 10CCB on Income-tax Portal but was unable to do so.

Therefore, vide Para No. 10.4 of reply dated 28.02.2023 filed to PCIT,

copy at Pages 319-322 of Paper-Book, the assessee made following

categorical submission to PCIT:

“10.4 That inadvertently due to oversight, the Form 10CCB was left to be filed on the portal in that particular time for AY 2018-19. However, we are not able to file the same till date because of technical error on the Income-tax Portal.”

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 (vi) That the assessee continued his efforts for filing Form No. 10CCB and

ultimately, it could be filed only on 08.02.2024. Hence, the assessee

filed following reply to AO during the proceeding of fresh assessment;

this reply of assessee is re-produced by AO himself on Page 4 of the

order of fresh assessment dated 28.03.2024:

“2.2] That the Form 10CCB could not be filed earlier due to some technical error/issue on the portal. We have filed grievances on the portal but the same could not be rectified by the department. Therefore, due to technical issue of portal, the same could not be filed on the time. 2.3] That after multiple attempts and grievances logged on the portal for Form 10CCB, the same could be filed.” 8. Having submitted thus, the Ld. AR made following contentions:

(i) That irrespective of whether it was original assessment or fresh

assessment, when the Form No. 10CCB was available with AO at the

time of framing fresh assessment, the AO must have considered the

same and allowed deduction to assessee.

(ii) That, in the revision-order, the PCIT has restored the issue to AO for a

fresh examination. Therefore, when the AO conducted proceeding of

fresh assessment to re-examine the issue of allowability of deduction

and the assessee filed Form No. 10CCB during such proceeding, the

same should be construed as a sufficient compliance.

(iii) That, the crux of the decisions of CIT Vs Panama Chemical Works

[2007] 292 ITR 147 (MP) and the Hon’ble Supreme Court in CIT vs.

G.M. Knitting Industries (P.) Ltd. [2015] 376 ITR 456 (SC) is such that if

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 the report in Form No. 10CCB is filed before completion of assessment,

the assessee cannot be divested of the benefit of deduction statutory

available and the AO must allow same.

representatives of both sides and perused the material available on record.

The limited controversy involved in the present appeal is whether the

assessee is entitled to deduction u/s 35AD when the audit report in Form

No. 10CCB was not filed along with the return of income but was furnished

subsequently during the course of fresh assessment proceedings conducted

by the AO pursuant to the revision order passed u/s 263.

assessee had obtained the report in Form No. 10CCB from its Chartered

Accountant although the same was not filed to Income-tax Department. It is

also not in dispute that the assessee had filed the Tax Audit Report in Form

No. 3CD and in Clause No. 19 thereof the auditors specifically reported the

amount admissible u/s 35AD at Rs. 8,60,92,248/-. The original assessment

u/s 143(3) was completed on 04.02.2021 accepting the Tax Audit Report

(Form No. 3CD) and the returned income without raising any query

regarding filing of Form No. 10CCB.

ground that the AO had not examined the issue of deduction claimed u/s

35AD and the requirement of filing audit report in Form No. 10CCB. The

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 assessment was accordingly set aside with a direction to the AO to re-

examine the issue after making necessary enquiries. During the course of

such fresh assessment proceedings, the assessee furnished the audit report

in Form No. 10CCB on 08.02.2024 i.e. before completion of the fresh

assessment by AO on 28.03.2024.

ground that the assessee had not furnished Form No. 10CCB within the due

date of filing the return of income as prescribed u/s 35AD read with section

80-IA and Rule 18BBB and proviso to Rule 12(2).

sustained. The Hon’ble Supreme Court in the case of CIT vs. G.M. Knitting

Industries (supra) has clearly held that where the audit report in the

prescribed form is filed before completion of assessment, the deduction

cannot be denied merely because such report was not filed along with the

return of income. Similar view has been taken by the Hon’ble jurisdictional

High Court of Madhya Pradesh in CIT vs. Panama Chemical Works (supra)

wherein it was held that filing of the prescribed audit report along with the

return is a directory requirement and if the report is furnished before

completion of assessment, the assessee cannot be denied the benefit of

deduction.

applicable only where the report is filed before completion of the original

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 assessment and not in the course of fresh assessment proceedings pursuant

to section 263, in our view, is devoid of merit. Once the original assessment

is set aside by the PCIT and the matter is restored to the file of the AO for

fresh examination, the proceedings conducted thereafter assume the

character of a fresh assessment and the AO is required to consider all

relevant material available on record while adjudicating the issue. Therefore,

when the assessee furnished the audit report in Form No. 10CCB before

completion of such fresh assessment, the same constituted sufficient

compliance of the procedural requirement.

had otherwise disclosed the claim of deduction u/s 35AD in the return of

income as well as in the Tax Audit Report in Form No. 3CD. The assessee

had also foregone claim of depreciation u/s 32 on the assets in respect of

which deduction u/s 35AD was claimed. These facts demonstrate that the

claim of deduction was bona fide and duly supported by relevant records.

PCIT during revision-proceedings as well as to the AO during proceeding of

fresh assessment explaining the background and the reasons for non-filing

of Form No. 10CCB alongwith return of income. The assessee submitted

that the Form No. 10CCB had already been obtained from the Chartered

Accountant but the same could not be filed to the Income-tax Department

inadvertently. The assessee also brought on record that efforts were made to

upload the Form No. 10CCB subsequently and ultimately the same was

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19 successfully filed on 08.02.2024 during the course of fresh assessment

proceedings. Further, it was the first year of operations of assessee due to

which there occurred a bonafide omission on the part of assessee. These

submissions of the assessee have not been controverted by the Revenue

authorities with any material to the contrary.

procedural requirements relating to filing of reports should be construed

liberally where the substantive conditions for deduction are fulfilled.

judicial precedents of the Hon’ble Supreme Court and the Hon’ble

jurisdictional High Court, we find no infirmity in the order of the Ld. CIT(A)

who has directed the AO to allow deduction u/s 35AD following those

precedents. Accordingly, the grounds raised by the Revenue are dismissed

and the order of the Ld. CIT(A) granting relief to the assessee is upheld.

Order pronounced in open court on 20/03/2026

Sd/- Sd/-

(PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Indore िदनांक/Dated : 20/03/2026

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Oddiville Foods and Frozen ITA No. 427/Ind/2025 – AY 2018-19

Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order E COPYSr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

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