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Facts
The assessee claimed deduction under Section 10AA of the Income Tax Act, 1961, and filed Form 56F within the extended due date. However, the CPC disallowed the deduction citing that Form 56F was not filed on time, and also because the return of income was filed belatedly under Section 139(4).
Held
The Tribunal held that the Form 56F was filed within the extended period granted by the CBDT, and the disallowance by the CPC was due to a technical error. The amended proviso to Section 10AA(ii), which requires filing the return by the due date, was effective from April 1, 2024, and thus not applicable to the assessment year in question. The Tribunal followed coordinate bench decisions in similar cases.
Key Issues
Whether the deduction under Section 10AA can be denied for not filing the return of income by the original due date when Form 56F was filed within the extended period and the proviso disallowing deduction for late filing is not applicable retrospectively.
Sections Cited
10AA, 115JB, 139(1), 139(4), 143(1)(v)
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Order
: 05.01.2026 O R D E R
PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short] dated 30.03.2025 for the Assessment Year 2023-24 raising following grounds of appeal :- “Whether the ld. CIT (A) has erred in directing the A.O. to verify the conditions stipulated in Section 10AA of the Act to decide its allowability for the assessment year under consideration, instead of considering the provisions of section 143(1)(v) of the Act which specifically disallow the deduction claimed under seciton10AA of the Act.”
Brief fact of the case are, the assessee filed its return of income online vide receipt acknowledgement number 546633151091223 on 09.12.2023 declaring an income of Rs.47,43,570/- under the normal provisions of tax and of Rs. 3,23,12,654/- as book profit under section 115JB of the Income-tax Act, 1961 (for short ‘the Act’) after filing prescribed Form- 56F on 27.11.2023 (prescribed Form for claiming deduction under section 10AA from a Chartered Accountant) and a copy of Form 56F is placed at page no.1-3 of paper book. The assessee company during the year under appeal was engaged in manufacture and trading of electrical enclosures (An electrical enclosure is a cabinet or box that protects electrical or electronic equipment and prevents electrical shock). The manufacturing unit of the assessee company was situated in Adani SEZ Mundra. It claimed deduction under section 10AA of the Act, of Rs.2,99,49,960/- in its return of income for AY 2023-24. The assessee company is a recognized star export house MSME. The return of income was filed under section 139(4) of the Act, since the online facility for filing Form-56F was not available till the due date of filing the return of income due to technical glitch and the CBDT extended the time for filing the online Form-56F to 31.12.2023 and a copy of CBDT circular vide circular no.18 of 2023 dated 20.10.2023 is placed at page no.4 of paper book. The Form 56F was filed on 27.11.2023 which was within the extended period. The Assessee also filed the Tax Audit Report u/s 44AB in time on 30.09.2023.
At the time of hearing, ld. DR of the Revenue submitted that the provisions of section 143(1)(v) prohibits the claim when the assessee failed to submit the relevant form within time of filing return of income. He relied on the findings of lower authorities.
On the other hand, ld. AR of the assessee submitted that the assessee is in receipt of intimation under section 143(1) dated 28.05.2024 wherein the claim of deduction of Rs.2,99,49,960/- under section 10AA has been disallowed by the CPC wherein in the intimation it is stated at page no.-5 (English Version) that: "Deduction under section 10AA is claimed but Form-56F is not filed. To claim deduction u/s 10AA. it is mandatory to file Form- 56F on or before 31.12.2023,jailing which, deduction will not be allowed. If the Form-56F is filed before the due date, deduction claimed in the return will be allowed to the extent computed in the Form-56F (i.e. lessor of the claim in ITR and the sum of all Forms filed before the due date)."
He further submitted that the assessee is eligible for claiming deduction under section 10AA of the Act, which claim had apparently been disallowed due to a technical error of the processing software of the CPC, having not been aligned with the extension of time granted by CBDT vide above-referred circular extending the filing Form- 56F till 31st December He submitted that the assessee is eligible for claiming deduction under section 10AA of the Act and has been granted deduction under section 10AA of the Act, on fulfillment of the conditions enumerated in section 10AA of the Act since the assessment year 2020-21. He further submitted that the company filed an appeal which was decided in favour of the company vide order dated 30th March 2025 by ADDL/JCIT (A)-2, Noida. He submitted that the ADDL/JCIT, held in para 8 at page of CIT (Appeals) order, that Form- 56F was duly filed within the extended time granted by CBDT. The relevant paragraph 8 of the order is extracted hereunder for ready reference. “8. The contention of the appellant that the Form 56F was duly filed within the extended period granted by the CBDT appears to be correct. However, to verify the actual filing of Form 56F. this aspect requires verification by the Assessing Officer.”
He submitted that the ADDL/JCIT Order held in para 10 at page 6 of CIT (Appeals) order that the contentions of the appellant appear to be prima facie correct but require verification by the Assessing Officer to ensure that the conditions prescribed under section 10AA are satisfied. He submitted that a copy of issue letter dated 21.05.2025 issued by assessing officer to ensure that the conditions prescribed under section 10AA placed at page no. 23 of the paper book. He further submitted that the Assessing Officer has granted the Appeal Effect vide his order dated 16.07.2025 after verification of the fulfillment of the conditions by the company for availing deduction under section 10AA and held in para 4 of its order that the reply of the assessee has been considered and found in order.
He further brought to our notice para 4.2 at page 5 of the Appeal Effect order wherein the Assessing Officer has stated that the Form-56F had been filed by the company on 27.11.2023 which was within the extended time granted by the CBDT. He submitted that a copy of the CBDT notification extended the time for filing Form- 56F to 31st December 2023 is placed on record.
He submitted that the CPC has also given another reason for disallowing the claim under section 10AA which was apparently due to filing of return of income beyond the due date specified under section 139(1) of the Act. He submitted that a proviso was inserted below the section 10AA (ii) w.e.f01.04.2025 i.e. from assessment year 2024-25 as under: “Provided that no such deduction shall be allowed to an assessee who does not furnish a return of income on or before the due date specified under sub- section (1) of section 139.”
He submitted that the CPC has applied the amended proviso to section 10AA(ii) retrospectively to assessment year 2023-24 while denying deduction under section 10AA of the Act which is not permissible and is bad in law. It is settled law that any amendment cannot be applied retrospectively unless it is of a clarificatory nature, and that too in the peculiar facts and circumstances of that case.
He further brought to our notice the judgement of the coordinate Bench in the recent case of Arvind Kumar Agarwal, Delhi vs ITO [2023] 149 taxmann.com 472 (Delhi - Trib.) in which the assessment year under reference was assessment year 2018-19.
He submitted that the Tribunal in the above case followed the ratio of the decisions of Supreme Court and of Delhi High Court to hold that the conditionality of filing the return of income within the time prescribed under section 139(1) could not be made applicable to the Assessment Year 2018-19 and held as under :- “14. The Hon'ble High Court of Delhi has applied this doctrine of interpretation of Scott R. Bayman v. Commissioner of Income-tax, Delhi [20l2} 24 taxmann.com 214 (Delhi) and referred to the abovementioned judgment of the Hon'ble Apex Court. When the Legislature has omitted such a restriction in section 10AA of the IT Act in its wisdom, it is not for the A.O. nor the CIT(A) to prescribe such a conditionality and impose it on an assessee. Therefore, the denial of the exemption on the ground of not filing the return of income within the specified due date u/s 139(1) the IT Act is not legally correct.”
He submitted that the coordinate Bench in the case of the same assessee Arvind Kumar Agarwal, Delhi vs Pr, CIT [2024] 168 taxmann.com 497 (Delhi - Trib.) delivered an order dated 05.04.2024 for the Assessment Year 2023-24 in which case also the claim of deduction under section 10AA was denied due to filing of return under section 139(4) of the Act and the Tribunal followed its earlier decision and held deduction under section 10AA cannot be denied due to late filing of return of income for the Assessment Year 2023-24. He submitted that the ratio of the cases referred to above is applicable to the facts of the assessee's case. There was no mandatory specific requirement of filing the return of income within the due date specified under section 139(1) of the Act in A.Y 2023-24 to claim deduction under section 10AA of the Act. The assessee, therefore, has complied with the provisions of section 10AA of the Act, in view of which the revenue appeal deserves to be dismissed.
Considered the rival submissions and material placed on record. We observed that the assessee has filed its return of income u/s 139(4) of the Act and filed the Form 56F on 27.11.2023 within the extended period of time by the CBDT. The CPC while processing the return of income treated the Form 56F filed belatedly and accordingly denied the benefit claimed by the assessee u/s 10AA of the Act. The CPC wrongly treated the filing of Form56F beyond time whereas the CBDT has extended the filing of form upto 31.12.2023. The above facts were rightly and properly appreciated by the ld. CIT (A) and allowed the claim of the assessee. We also find that the coordinate Bench in the case of Arvind Kumar Agarwal vs. ITO (supra) held as under :- "In the Finance Bill, 2023, the Legislature has proposed inserting proviso to sub section (1) of section 10M of the Act stating no deduction under section 10AA shall be allowed to the assessee who does not furnish return of income on or before the due date specified under sub section (1) of section 139 of the Act. Accordingly, a proviso was inserted after clause (ii) of sub section (1) of section 10AA by the Finance Act, 2023 with effect from 1.04.2024 inserting a condition for mandatory filing return of income within the due date specified under sub section (1) of section 139(1) of the Act so as to avail exemption under section 10AA of the Act. This amendment was brought into statute with effect from 1.04.2024. Therefore, we are of the considered view that for the year under consideration i.e. assessment year 2018-19 there is no mandatory requirement of filing the return of income within the due date specified under section 139(1) of the Act for availing exemption undersection10AA of the Act.”
Respectfully following the aforesaid decision of the coordinate Bench, we are inclined not to disturb the findings of the ld. CIT (A) and accordingly dismissed the grounds raised
by the Revenue.
15. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on this 5th day of January, 2025.