Loading judgment…
Facts
The assessee company, engaged in the business of Healthcare & Lifesciences Industry & Medical Devices/Bio Medical Sector, claimed a deduction of Rs. 3,56,22,482/- under Section 80-IAC for AY 2023-24. The return was processed under Section 143(1) and the deduction was disallowed due to the non-filing of Form 10CCB. The assessee argued that Form 10CCB is not applicable for claiming deductions under Section 80-IAC.
Held
The Tribunal observed that the assessee is a recognized startup and eligible for the deduction. Although filing Form 10CCB is a requirement under Section 80IA(7), the form as prescribed does not have a column for Section 80-IAC deductions, making it impossible to file. The Tribunal considered the filing of Form 10CCB as directory and not mandatory in this case, especially given the technical impossibility and the fact that the books were audited. The issue was remitted back to the AO to obtain the relevant Form 10CCB and allow the claim if genuine.
Key Issues
Whether the disallowance of deduction under Section 80-IAC for non-filing of Form 10CCB is justified, when the prescribed form is not applicable for this section.
Sections Cited
80-IAC, 143(1)(a)(ii), 80IA(7), 139(1), 288(2), 44AB, 18BBB, 12(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCHES ‘I’: NEW DELHI.
Before: SHRI S. RIFAUR RAHMAN & SHRI VIMAL KUMAR
PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals) ADDL/JCIT(A)-1, Chandigarh (hereinafter referred to ‘ld. CIT (A)’) dated 19.09.2024 for Assessment Year 2023-24.
At the time of filing of appeal, the Registry has pointed out a defect that appeal is time barred by 198 days.
We have heard both the counsels on the issue of condonation of delay. In our considered opinion, there was a reasonable cause for the delay in filing the appeal. Therefore, we condone the delay in filing the appeal before the Tribunal.
Brief facts of the case are, assessee-company was incorporated on 04. 12. 2019 to carry on the business of Healthcare & Lifesciences Industry & Medical Devices/ Bio Medical Sector. After incorporation, the assessee company started the business of Biomedical and Medical Devices and producing Covid Testing Kits and has duly filed Income Tax Return for AY 2023-24 vide Acknowledgement No. 49424911311023 dated 31.10.2023 within due date 31/10/2023 wherein declared NIL income after claiming deduction amounting to Rs. 3,56,22,482/- u/s 80IAC of Income Tax Act, 1961.
The assessee company has been recognized as Startup by the Department for Promotion of Industry and Internal Trade and a Certificate of Recognition has been duly issued to the assessee company by Government of India, Ministry of Commerce & Industry Department for Promotion of Industry & Internal Trade vide Certificate No DIPP62084 issued on 06.08.2020 and valid up to 03.12.2029.
That assessee company has duly mentioned Recognition Number of Start Up allotted by DPIIT at Serial No. Q of Filing Status of ITR-6 of return of Income Tax, which has been considered in intimation u/s 143(1) dated 30/04/2024 .The accounts of the assessee were duly audited as per provision of the Act. The deduction of Rs. 3,56,22,482/- claimed under section 80-IAC has been certified by the Tax Auditors in Clause No. 33 of the Tax Audit Report, under heading "amount admissible as per provisions of the Income Tax Act, 1961", against section 80-IAC, the Tax Auditor has duly certified that the assessee is eligible for deduction of Rs. 3,56,22,482/- 7. The CPC, Bengaluru has processed the return of income and issued intimation u/s 143(1) of Income Tax Act, 1961 and wherein disallowed the deduction Rs. 3,56,22,484/- u/s 80IAC by invoking clause (II) of Section 143(1)(a) on ground that the assessee has not filed Form No. 10CCB within due date for AY 2023-24.
Aggrieved by the above order, assessee filed an appeal before Ld. CIT(A) Chandigarh.
Before ld. CIT(A), the assessee submitted as under:- a) That disallowance of deduction claimed by the assessee company u/s 80-IAC is without jurisdiction, illegal, contrary to the provision of the Act and bad in law. b) It was submitted before Ld. CIT(A) that the denial of deduction u/s 80-IAC on ground that the assessee has not filed Form 10CCB is illegal in as much as the said Form 10CCB is neither relevant nor applicable for claiming deduction under section 80-IAC of the Act. c) It was submitted before Ld. CIT(A) that section 80-IAC(4) provides that provisions of sub-section (5) and sub-section (7) to (11) of the Section 801A of the Act shall apply to start ups for the purpose of allowing deductions u/s 80-IAC(1) The Section 801A(7) provides that deduction u/s 80-IAC shall be admissible when the deduction claimed has been 'audited by the accountant referred to in section 288(2) i.e. by the Tax Auditor and that the assessee furnishes the report of such 'audit in prescribed form' signed and verified by the Auditor.
d) It was submitted before Ld. CIT(A) that the Assessee has duly claimed the deduction u/s 801AC in the ITR, the accounts are duly audited under section 44AB by the Tax Auditor, the Tax Auditor has duly certified the deduction in Clause No. 33 of the Tax Audit Report and thus, the Assessee is eligible for claiming the deduction under section 80-IAC. e) It was submitted before Ld. CIT(A) that, as regards the ground for denial i.e report in prescribed form under Rule 18BBB being 10CCB has not been filed, it was submitted that in terms of Rule 18BBB of Income Tax Rule, 1962 ('Rules) the requirement to file audit report in Form 10CCB is prescribed only for claiming deduction u/s 801 or 801A or 801B or 80IC and not for the section 80-IAC. Rule 12(2) of Income Tax Rules, also does not refer to furnishing such Form for claiming deduction u/s 80-IAC. f) It was submitted before Ld. CIT(A) that, without prejudice to the above, even if Rule 18BBB is assumed to be applicable in respect of start-ups claiming deduction u/s 80-IAC, the Form 10CCB, that has been prescribed in Official Gazette vide Notification No. 43/2005 dated 04.02.2005, the same contains no field/column for claiming deduction u/s 80-IAC g) It was submitted before Ld. CIT(A) that the Form 10CCB, as prescribed in Official Gazette, refers only to the provisions of section 801, 801A, 80IB and 80IC. There is no field/column whatsoever in the said form for auditor to certify regarding deduction claimed u/s 80-IAC. Therefore, in absence of any Form 10CCB, having been notified or updated by Rule making authority, so as to incorporate the details of deduction under section 80-IAC, there is legal impossibility to file such form in respect of startups claiming deduction u/s 80-IAC h) During appellate proceedings it was specifically pointed out that a perusal of Form 10CCB reveals, that is relevant only for section 801, 80IA, 801B and 80IC, as is evident from below summary under:- i) It was submitted before Ld. CIT(A) that at S. No. 30 of Form 10CCB, the requirement is to fill details of "Deduction under section 80-1/80- 1A/80-IB/80-IC (Strick out whichever is not applicable)". There is no field for certifying deduction u/s 80-IAC. h) Moreover, the declaration to be provided by Tax Auditor, in the notified Form 10CCB, provides for certification that "the conditions stipulated in section 80-1/80-1A/80-18/80-IC (Strick out whichever is not applicable)" are fulfilled. There is no option given in the Declaration to the Auditors that conditions stipulated u/s 80-IAC are fulfilled. j) It was submitted before Ld. CIT(A) that the undertaking or enterprise satisfied the conditions stipulated in section 80-1/80-1A/80-1B/80-IC (Strick out whichever is not applicable) and the amount of deduction claimed under this section in Item 30 is as per the provisions of the Income Tax Act and meets the required conditions." k) Thus, there is a legal impossibility to file such Form 10CCB in respect of start-ups and the Tax Auditor can neither certify in such Form nor can the Assessee file such a Form. It is legally impossible for the Tax Auditor to issue a declaration that "the conditions stipulated in section 80-1/80- 1A/80-IB/80-IC (strike out whichever is not applicable)" are fulfilled in respect of startup Deduction claimed under section 80-IAC of the Act and not under section 80-1/80-1A/80-IB/80-IC. l) The Tax Auditor in any case has duly certified that Assessee is eligible for claiming deduction under section 80-IAC in the Tax Audit Report under section 44AB in clause 33 and thus, thus, (a) there is certification on the eligibility from the Tax Auditor, (b) there is no dispute on the eligibility of the Assessee and (c) there is also compliance with the provision of section 80-IA(7) to the extent applicable m) It was submitted before Ld. CIT(A) that, without prejudice to the above, the issue of submission of Form 10CCB is a procedural issue and the same should not be a ground to deny deduction under section 80-IAC in absence of any allegation that the Assessee does not comply with the conditions. n) It was submitted before Ld. CIT(A) that, without prejudice to the above, it is a settled law that filing of Form 10CCB is directory and not mandatory for claiming deduction under section 80-IAC and thus, the disallowance is not warranted. Assessee relied upon several judicial precedents in this regard as under: i) CIT vs G M Knitting Industries (P) Ltd [2015] 376 ITR 456 (SC) ii) CIT vs Contiments Electricals (P) Ltd [2009] 317 ITR 249 (Delhi) iii) Marudhamalai Sri Dhandapani Spinning Mills vs DCIT, dated 06.04.2023 (ITAT, Chennai) iv) DCIT vs Jupiter Metal Industries P Ltd, dated 15/10/2010 (ITAT, Delhi) v) ACIT vs Green Dot Health Foods Pvt Ltd, dated 09.02 2023 (ITAT, Delhi). o) It was submitted before Ld. CIT(A) erred in not appreciating that there is a legal impossibility to file such Form 10CCB in respect of start-ups and the Tax Auditor can neither certify in such Form nor can the Assessee file such a Form. The Form 10CCB, as has been prescribed, is neither applicable nor relevant for start-ups claiming deduction under 80- IAC. Therefore, it is submitted that the assessee cannot be penalized for technical default in Format of Form 10CCB.
After considering the above, Ld. CIT(A) dismissed the appeal by observing as under:- 5.1 I have considered the submission made by the appellant and also gone through the material available. The appellant company is engaged in the business of Healthcare & Lifesciences Industry & Medical Devices/Biomedical sector and has obtained Certificate for Recognition as Start-up from Department for Promotion of Industry & Internal Trade (DPIIT) via Certificate No. DIPP62084 dated 06-08-2020 valid for 10 years up to 03-12-2029. In the return of income, the appellant has claimed deduction of Rs.3,56,22,484/- under section 80-IAC of the Act in respect of business as eligible start-up. Admittedly, the report in Form No. 10CCB was not filed by the appellant.
5.2 As per provisions of Section 80-IAC of the Act, there are various conditions prescribed therein which are required to be satisfied to become eligible for such deduction. The requirement of getting the books audited, obtaining such audit report and furnishing the same within specified due date which is one month prior to the due date for filing the return of income under section 139(1) of the Act, is one of many such conditions. The audit report in Form No. 10CCB is in fact a certificate from the Auditor regarding satisfaction of all other conditions prescribed under section 80-IA of the Act. Therefore, the filing of the same is all the more important in view of the fact that the return form does not have any column regarding satisfaction of other prescribed conditions. In the absence of the audit report, there is no other way to ascertain the fulfillment of such conditions. ………………. 5.3 The appellant's submission that the furnishing of Form No. 10CCB made applicable to the assessee claiming deduction under section 80- IAC, the furnishing of audit report in Form 10CCB within specified date is mandatory for claiming deduction under section 80-IAC also. So, it is incorrect to say that the furnishing of Form 10CCB has not been prescribed under section 80-IAC r.w.s 80-IA of the Act and Rule 18BBB of the Rules.
5.4 So far as the contention of the appellant that there is no column in Form 10CCB regarding deduction under 80-IAC is concerned, the same is not tenable. As per relevant provisions of the Act and Rules as reproduced above, the appellant was required to furnish audit report in Form 10CCB. The appellant ought to have filled the form to the extent applicable to it and furnish the same online. But, the appellant has not furnished the same and has also not placed any document or evidence to show that the online facility provided by the Income-tax Department did not allow him to furnish the Form 10CCB so filled by him. In view of these facts and legal position, the action of the CPC in disallowing the deduction claimed under section 80-IAC is valid and as per provisions of law.
Aggrieved with the above order assessee preferred an appeal before us raising following grounds of appeal:-
2 . That on the facts of the case, in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance of deduction claimed under section 801AC (Part-C of Chapter VI-A) of Income Tax Act, 1961 being one hundred percent of the profits and gains derived from such business for third year amounting to Rs. 3,56,22,484/- by making the adjustments u/s 143(1)(a)(ii) on the alleged ground that Form 10CCB is not filed or not filed within due date.
That the Ld CIT(A) has wrongly confirmed the disallowance of Rs. 3,56,22,484/- on the alleged ground that Form 10CCB is not filed or filed within due date or extended due date for AY 2023-24. Without appreciating the fact that Form 10CCB has been prescribed for claiming deduction under section 801(7)/IA(7)/IB/IC of Income Tax Act 1961; but there are no relevant schedules wherein such details regarding deduction claimed u/s 801AC of Rs. 3,56,22,484/- can be filed. Thus, filing of Form 10CCB in context of deduction claimed u/s 801AC is not applicable at all.
That the Ld CIT(A) has failed to appreciate that the appellant company is engaged in the business of Healthcare & Lifesciences Industry & Medical Devices/Biomedical sector and has claimed deduction by satisfying the provisions of section 801AC of Income Tax Act, 1961 and after obtaining Certificate for Recognition as Start-up from Department for Promotion of Industry & Internal Trade (DPIIT) via Certificate No. DIPP62084 dated 06- 08-2020 valid for 10 years up to 03-12-2029.
That Ld. CIT(A) has erred in confirming incremental interest u/s 234Band 234C amounting to Rs. 705309/- and Rs. 2,96,171/-.
The appellant craves leave to add, alter, amend, modify or forego any of the grounds of appeal before or at the time of hearing.
At the time of hearing, Ld. AR of the assessee brought to our notice similar submissions made before First Appellate Authority and made similar argument before us also.
On the other hand, Ld. DR relied on the detailed findings of the Ld. CIT(A).
Considered the rival submissions and material placed on record, before us, Ld. AR of the assessee submitted that the Assessing Officer under Section 143(1)(a)(ii) proceedings has disallowed the deductions claimed by the assessee u/s 80IAC of the Act for the reason that assessee has not filed the Form 10CCB which was not filed or not filed within the due date.
In this regard, assessee has submitted that even though there is a requirement for the assessee to file the Form 10CCB before filing the return of income or along with the return of income but CBDT has not amended the Form 10CCB to accommodate the deductions claimed by the assessee u/s 80IAC of the Act. That being the case the Form 10CCB is not applicable in the case of the assessee and he objected to the findings of the Ld. CIT(A) in confirming the disallowances.
He further submitted that assessee is a certified start up Company from the department for Promotion of Industry and Internal Trade which is valid for 10 years upto 03.12.2019 and he also relied on the several decisions wherein it was held that filing the Form 10CCB is only the directory in nature, therefore, the claim of the assessee cannot be denied.
After considering the factual matrix on record, we observed that assessee company was established on 04.12.2019 and carrying on the business since then. We observed that assessee has declared similar results in the preceding assessment years also and claimed deduction u/s 80IAC of the Act. The year under consideration, the assessee no doubt got its account audited from the statutory Tax Auditor and due to non-availability of the relevant clause to disclose the details in the Form 10CCB, the assessee did not file the relevant Form 10CCB along with the return of income with the wrong understanding that the relevant Form 10CCB is not applicable in the case of assessee.
However, at the time of hearing, Ld. AR of the assessee accepted the facts that to claim deduction u/s 80IAC the relevant provisions of Section 80IA (7) of the Act are applicable, as per the above provisions, assessee has to file Form 10CCB before filing return of income. Even though it is requirement of law that assessee has to file Form 10CCB along with the return of income. However, we observed that assessee claimed the deduction u/s 80IAC over the years and we do not know how the revenue has allowed the same in the preceding assessment years. Assessee being a start up company and also duly registered by the DPIIT, it is an established fact that assessee is eligible to claim deduction u/s 80IAC of the Act and merely because assessee has not submitted the relevant Form 10CCB which is requirement as per Section 80IA(7) of the Act, however, we also noticed that the books of accounts are duly audited by the assessee and only failed to file the Form 10CCB along with the return of income.
In our considered view, filing of Form 10CCB is only a directive in nature and merely because of above such failure, the assessee cannot be denied the deduction u/s 80IAC because of such technical error. Assessee being a start up company, we cannot reject the claim of the assessee for such technical error which can be rectified by the tax authorities by directing the assessee to file a Form 10CCB in due course of regular assessment. Since the above mistake was found in summary assessment. It is also fact on record that the assessee had failed to follow the provision of Section 80IA(7) of the Act. For the sake of complete justice and the Courts have held that the submission of Form 10CCB is only directory in nature, we are inclined to remit this issue back to the file of JAO with the direction to obtain the relevant Form 10CCB and if the claim of the assessee is genuine the same should be allowed.
Therefore, we are inclined to allow the claim of the assessee in above terms.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on this day of 6th February, 2026.
Sd/- Sd/- (VIMAL KUMAR) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 06.02.2026 *Mittali Sr. PS