BAJRANG WIRE PRODUCTS (INDIA) PRIVATE LIMITED,BAJRANG WIRE PRODUCTS (INDIA) PRIVATE LIMITED vs. DCIT CIRCLE -4-JAIPUR, RJN-C-(104)(1), JAIPUR

That the non-allowance of said claim of deduction u/s 80JJAA of Rs. 6,71,052/- by the ld. CIT (A) is against the provisions of the Act, CBDT Circular and the judicial precedents in this regard.

That on facts and in law, the ld. CIT (A) has erred in not allowing deduction as claimed u/s 80JJAA of Rs. 6,71,052/-. The said deduction is allowable in toto including as per prescribed auditor’s certificates.

That the grounds of appeal as herein are without prejudice to each other.

That the appellant respectfully craves leave to add, amend, alter and/or forego any ground(s) at or before the time of hearing.”

The brief facts of the case are that the assessee company is engaged in manufacturing of wire drawings and has three manufacturing facilities. Assessee has e-filed its Return of Income dated 25.10.2018 declaring the total income at Rs. 5,79,74,670/- for the year under consideration. The assessee filed the revised its return of income on 29.12.2018 declaring an income of Rs. 5,11,66,180/-. The case of the assessee was selected for scrutiny under CASS. Accordingly notice under section 143(2) of the Income Tax Act, 1961 was issued on 22.09.2018 through ITBA portal and duly served upon the assessee. Information under section 3 Bajrang Wire Products (India) Pvt. Ltd, Jaipur.

At the time of hearing before us, the ld. AR of the assessee submitted his written submission as under :-

1 Your honour, the brief facts are that the Assessee Bajrang Wire Products (India) Private Limited e-filed its return of income for the AY 2018- 19 on 25/10/2018 declaring an income of Rs. 5,79,74,670/- and revised its return on 29/12/2018 at income of Rs. 5,11,66,180/-. The Assessee company is engaged in the business of manufacture of wire drawing.

2 During the year assessee has claimed deduction of Rs. 6,71,052/- u/s 80JJAA. The deduction was not claimed in original return of income filed on 25/10/2018 but it was claimed in revised return filed on 29/12/2018. During the assessment proceeding the assessee was requested to furnish form-10DA issued by accountant and it was furnished by the assessee. As per submission, the assessee has claimed that 33 new workmen were employed during the year, who were considered entitled to a deduction to whom emoluments amounting to Rs. 22,36,840/- was paid, and 30% of the same, i.e. Rs. 6,71,052/- was claimed as deduction u/s 80JJAA. Your honour all these facts are appearing in the Ld. AO order, pages no. 2 point no. 4. For the sake of ready reference the Section 80AC reads as under:-

the 1 st day of April, 2006 or any subsequent assessment year, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80- IC [or 80-ID or section 80-IE];

the 1 st day of April, 2018 any deduction is admissible under any provisions of this chapter under the heading ”C.-Deductions in respect of certain incomes”

4 In the case of the assessee, it had filed a revised return on 29.12.2018 (kindly see Ld. AO order, pages no. 2 point 4 line 3 wherein the Ld. AO confirmed this fact) which is before the expiry of one year from the relevant assessment year and therefore the return filed is a valid return as per the provisions of section 139(5), as the original return was filed under section 139(1) within the due date prescribed. In fact, the assessee complied with the provisions of section 80AC of the Act by filing its original return on 25.10.2018 which is within the due date specified under section 139(1) of the Act. In view of our above observations and finding, the Ld. AO disallowed the aforesaid deduction by holding that since the assessee had not made any claim in its original return filed under section 139(1).

5 Your honour the proper interpretation of the provisions of section 80A and 80AC of the Act allowed the claim of deduction of the assessee by holding that in order to claim such deduction;

6 Your honour, there is no mention in the Act that the claim of deduction of the Act had to be made in the original return of incomeand that the audit report had to be signed before the date of original return and hence, the disallowance of section 80JJAA of the Act by the AO is not tenable.

7 Your honour, the assessee had fulfilled all the conditions stated in the statute in order to avail the benefit of the Act.

8 Your honour, the assessee further submits that the furnishing of Form 10DA under rule 19AB is directory in nature and not mandatory, and it is sufficient compliance if the necessary Form 10DA under rule 19AB is filed before the assessing officer before the date of assessment, which admittedly been done in this case.

9 Your honour, kind attention is invited to Rule 19AB of the I.T. Rules 1962, to submit that the rules do not specifically provide for disallowing the claim of assessee for late filing of the form 10 -DA. The AR for the assessee placed reliance on decision of Gujarat High Court in the case of Association of Indian Panel Board Manufacturer (kindly see paper book page no. 13-17) in which on similar facts, the Gujarat High Court held that once the appropriate form in the form of Accountant report is available with the tax officer at the time of when assessment was completed, then the benefit of exemption/deduction cannot be denied to the assessee. Kindly allow to reproduce the relevant extracts of the decision of Gujarat High Court in the case of Association of Indian Panel board Manufacturer v. Dy. CIT [2023] 157 taxmann.com 550 (kindly see paper book page no. 13-17) in Revenue Tax Appeal Number 655 of 2022, in which the Gujarat High Court, while dealing with similar issue held that although the requirement of furnishing report was mandatory, filing thereof is a procedural aspect. Once, it is seen that the audit report, in Form 10B was available with the assessing officer at the time of framing of assessment, even though the same may not have been filed along with the return of income, the assessee is entitled to claim of exemption under Section 11(1) and 11(2) of the Act. The Gujarat High Court made the following observations, while deciding the issue in favour of the assessee/Appellant:

4 Recollecting the relevant dates, the income was filed on 31.8.2018. On 15.3.2019 Form 10B was filed electronically. On 7.12.2019 intimation under Section 143(1) of the Act was given to the appellant that the exemptions were denied, while processing the return of income on the ground that alongwith the return of income Form 10B was not filed.

5 It is to be observed in the present case that the Form D-the audit report, though not filed with the return of income, the same was available with the Assessing Officer when he processed the return of income under Section 143(1) of the Act. The conditions for claiming exemption under Section 11 was satisfied. Although the requirement of furnishing the report was mandatory, filing it is a procedural aspect. Even though the Form 10B was filed at a later stage, when it was part of the record of the Assessing Officer in the course of the processing the return of income, the Assessing Officer could not have denied the exemption claimed by the assessee under Sections 11(1) and 11(2) on the ground that the audit report was not filed.

6 The tribunal further committed an error in appreciating the import of Section 119 2(b) of the Act inasmuch as the application contemplated thereunder is only additional remedy for the assessee which could not be said to be compulsorily resorted to by the assessee. Circular No.7/18 dated 20.12.2018 issued under Section 119 of the Act could not, therefore, said to have taken away the appellate remedy.

7 The tribunal mi irected itself in yet another way when it observed that The Finance Act, 2015 with effect from 1.4.2016, that is from assessment year 2016-17 changed the legal position. There is no such change which could be said to have altered the legal position. The only change is with regard to the compulsory filing of the audit report in Form 10B in electronically form which is made mandatory under Rule 12 (2) of the Income Tax Rules, 1962. However, there is no change with regard to the substantive law about filing of the audit report, as stated above.

The moot aspect thus centers around the requirement of the of the audit report when the assessment was undertaken by the Assessing Officer even though the same may not have been filed along with the return of income. Filing of the audit report is held to be a substantive requirement but not the mode and stage of filing, which is procedural. Once the audit report in Form 12B is filed to be available with the Assessing Officer, before assessment proceedings take place, the requirement of law is satisfied. In that view, the Income Tax Tribunal was not justified in dismissing the appeal of the assessee.

1 The appellant assessee has to be held to be eligible and entitled to exemptions under Section 11(1) and 11(2) of the Act and the alleged ground of non-filing of the audit report alongwith

2 Accordingly, the substantial questions of law have to be decided in favor of the appellant.

They are accordingly decided. The appeal is allowed. "

10 Your honour, it is further stated that these Hon'ble Supreme Court in the cases of CIT v. G. M. Knitting Industries (P.) Ltd. [2016] 71 taxmann.com 35/[2015] 376 ITR 456 (kindly see paper book page no. 18-19) held that, even though it is necessary to file a certificate in Form 10CCB along with the return of income, if the same has not been filed with the return of income, but the same was filed before the final order of assessment was made, the assessee was entitled to claim deduction under Section 80-IB of the Act. Hence, Your Honor, looking into the instant facts and the decisions of the Hon'ble Supreme Court and the juri ictional Gujarat High Court referred to above, we request Your Honor to allow the claim of the assessee for deduction under Section 80JJA of the Act

11 Your honour, besides the above, the section 139(5) of the Act provides that if any person having furnished any return u/s. 139(1) of the Act discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier.

12 Your honour, the AR relied on the decision of Hon'ble Apex Court in the case of Goetze (India) Ltd. Vs. CIT reported in (2006) 284 ITR 323 (SC) (Kindly see paper book page no. 1-2) wherein it was held that any deduction/allowance which was not claimed in the original return can only be claimed by way of a revised return to be filed within the time allowed of the Act. The ARrelied on the decision held in Dcit, Cir-4, Kolkata, Kolkata vs Mackintosh Burn Ltd,, Kolkata on 15 March, 2017 (Kindly see paper book page no. 3-8). Your honour, the AR relied on the decision of the Hon'ble Juri ictional High Court in Mackintosh Burn Ltd., AY 2006-07 the case of CIT Vs. Universal Trading Co. reported in (1978) 114 ITR 412 (Cal) (Kindly see paper book page no. 9-10) held that if nothing is specifically stated in the statute, then the original return would include the revised return of income. In the instant case, since only the return of income has been stated in the statute and as such the return of income as mentioned in section 80JJA of the Act would mean revised return of income.

13 Your honour, the AR relied on the decision of Income tax officer v/s Ramesh Kumar Rathi ITAT Appeal No.2109 (Kol) of 2002 (Kindly see paper book page no. 11-12). wherein it was held that when the law permits the assessee to replace the original return by a revised return, on 9 Bajrang Wire Products (India) Pvt. Ltd, Jaipur.

14 Your honour, the AR relied on the decision of Dhanpur Sugar Mills 1973 v/s Commissioner of Income Tax 90 ITR 419 (Allahabad) wherein it was held that once a revised return is filed,the original return must be taken to have been withdrawn and to have been substituted by a fresh return for the purpose of assessment. The same view has been taken in Gopaldas Parshottamdas v. Commissioner of Income Tax, C.P. &U.P. [1941]9 I.T.R. 130

1 The ld. AR of the assessee further filed the Paper Book-1 index and Case Laws in support of his case as under :-

Hon’ble ITAT Kolkata ITO V. Ramesh Kumar Rathi vide IT Appeal No. 2109 (Kol.) of 2002 dated 07/07/2003 11-12 5. Hon’ble High Court of Gujarat in the case of Association of Indian Panelboard Manufacturer v. DCIT vide R/Tax Appeal No. 655 of 2022 dated 21.03.2023 13-17 6. Hon’ble Supreme Court of India CIT v. G.M. Knitting Industries (P) Ltd. Civil Appeal Nos. 10782 of 2013 & 4048 of 2014 dated 24.07.2015 18-19

On the other hand, the ld. DR relied on the orders of the lower authorities.

We have heard the rival contentions, perused the material on record and gone through the orders of the lower authorities. The ld. AR of the assessee submitted that the AO denied the claim of the assessee for the reason that the assessee has claimed the deduction of Rs. 6,71,052/- in the Revised return filed under section 139(5) on 29.12.2018 claiming deduction under section 80JJAA instead of Original return filed under section 139(1) of the I.T. Act, 1961 on 25.10.2018. The ld. A/R submitted that the assessee has employed 33 new workmen in its factory Bajrang Wire Products (India) Pvt. Ltd. during the year under consideration and paid emoluments amounting to Rs. 22,36,840/- and claimed deduction @ 30% thereon i.e. of Rs. 6,72,052/- under section 80JJAA of the IT Act, 1961. During the assessment period, as required by the AO, the assessee furnished Form 10DA issued by the Accountant. But the deduction was not allowed stating that the claim of the assessee in the Revised return is not a 11 Bajrang Wire Products (India) Pvt. Ltd, Jaipur.

4 Recollecting the relevant dates, the income was filed on 31.8.2018. On 15.3.2019 Form 10B was filed electronically. On 7.12.2019 intimation under Section 143(1) of the Act was given to the appellant that the exemptions were denied, while processing the return of income on the ground that alongwith the return of income Form 10B was not filed.

5 It is to be observed in the present case that the Form D-the audit report, though not filed with the return of income, the same was available with the Assessing Officer when he processed the return of income under Section 143(1) of the Act. The conditions for claiming exemption under Section 11 was satisfied. Although the requirement of furnishing the report was mandatory, filing it is a procedural aspect. Even though the Form 10B was filed at a later stage, when it was part of the record of the Assessing Officer in the course of the processing the return of income, the Assessing Officer could not have denied the exemption claimed by the assessee under Sections 11(1) and 11(2) on the ground that the audit report was not filed.

6 The tribunal further committed an error in appreciating the import of Section 119 2(b) of the Act inasmuch as the application contemplated thereunder is only additional remedy for the assessee which could not be said to be compulsorily resorted to by the assessee. Circular No.7/18 dated 20.12.2018 issued under Section 119 of the Act could not, therefore, said to have taken away the appellate remedy.

7 The tribunal mi irected itself in yet another way when it observed that The Finance Act, 2015 with effect from 1.4.2016, that is from assessment year 2016-17 changed the legal position. There is no such change which could be said to have altered the legal position. The only change is with regard to the compulsory filing of the audit report in 14 Bajrang Wire Products (India) Pvt. Ltd, Jaipur.

The moot aspect thus centers around the requirement of the of the audit report when the assessment was undertaken by the Assessing Officer even though the same may not have been filed along with the return of income. Filing of the audit report is held to be a substantive requirement but not the mode and stage of filing, which is procedural. Once the audit report in Form 12B is filed to be available with the Assessing Officer, before assessment proceedings take place, the requirement of law is satisfied. In that view, the Income Tax Tribunal was not justified in dismissing the appeal of the assessee.

1 The appellant assessee has to be held to be eligible and entitled to exemptions under Section 11(1) and 11(2) of the Act and the alleged ground of non-filing of the audit report alongwith return of income which was at the best a procedural omission, could never to an impediment in law in claiming the exemption.

2 Accordingly, the substantial questions of law have to be decided in favor of the appellant.

They are accordingly decided. The appeal is allowed. "

vk;djvk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File ITA No. 901/JPR/2025) vkns'kkuqlkj@ By order,