LS METATECH PRIVATE LIMITED, RAIPUR,RAIPUR vs. ITO, CIRCLE 1(1), RAIPUR, RAIPUR

The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 21.11.2025 for the assessment year 2024-25 as per the following grounds of appeal: “Ground No. 1: l. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 41,46,023/- made by the Ld. AO by disallowing the deduction claimed u/s 80-IAC of the Act on the alleged ground that the audit report in Form 10CCB was not filed at least one month prior to the due date for furnishing return of income u/s 139(1) of the Act (“the specified due date”).

The case of the assessee needs to be read with Section 80IAC of the Act specifically Section 80IAC(4) r.w.s 80-IA (7) to (11) of the Act. Therefore, the deduction claimed as specified u/s. 80IAC(4) shall be provided only if the provisions of Section 80-IA (7) to (11) had been complied with by the assessee. The A.O had denied deduction to the assessee since the assessee had not complied with Section 80-IA(7) of the Act, wherein audit report in Form 10CCB had not been filed within the specified due date i.e. the date as per Section 44AB of the Act. It is the claim of the assessee that though the audit was completed within the due date but it had not furnished Form 10CCB within such specified due date in accordance with Section 80-IA(7) of the Act due to the fault of the auditor. The assessee further contends that the requirement of e-filing of audit report in Form 10CCB is only directory in nature and failure to e-file the same before the specified due date cannot be so fatal so to deny the claim of deduction u/s.80IAC of the Act specifically when Form 10CCB is available on record before the assessment/intimation was completed u/s. 143(1) of the Act. In other words, the said Form 10CCB though was not filed within the due date specified in accordance with Section 80-IA(7) of the Act, however, it was available on record with the A.O before assessment was completed and hence, claim of deduction should have been allowed. The A.O ruled strictest interpretation of the fiscal statute and since the assessee has not complied with the relevant provisions of the Act, therefore, it was not entitled for deduction as claimed u/s. 80IAC of the Act.

That as per order of the Ld. CIT(Appeals)/NFAC, it is evident from Para 5 that there was no representation from the assessee in spite of reasonable opportunities of hearing accorded.

At the time of hearing, the Ld. Counsel for the assessee reiterated the facts and submissions that are already on record. That further, he had referred to the decision of the Hon’ble Apex Court in the case of CIT Vs. G.M Knitting Industries P. Ltd. (2015) 376 ITR 456 (SC), wherein the Hon’ble Apex Court had 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 assessment, in such case, the assessee was entitled to claim deduction u/s. 80-IB of the Act.

Per contra, the Ld. Sr. DR vehemently submitted that the case law referred by the assessee pertains to the year 2015 and in the subsequent decision of the Hon’ble Supreme Court in the year 2022 in the case of Pr. Commissioner of Income Tax-III Vs. Wipro Limited, Civil Appeal No. 1449 of 2022, dated 11.07.2022, the Hon’ble Apex Court had distinguished the decision of CIT Vs. G.M Knitting Industries P. Ltd. (supra) which has been referred by the Ld. Counsel and clearly held that in order to claim any deduction within the statute, the assessee shall have to comply with the provisions of the statute itself. If the assessee do not satisfy the provisions of the statute, in such scenario, the assessee shall not be entitled to claim any deduction within that statute. The relevant observations of the Hon’ble Apex Court are extracted as follows: “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, 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 be 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.

So far as the submission on behalf of the assessee that against the decision of the Delhi High Court in the case of Moser Baer (supra), a special leave petition has been dismissed as withdrawn and the revenue cannot be permitted to take a contrary view is concerned, it is to be noted that the special leave petition against the decision of the Delhi High Court in the case of Moser Baer (supra) has been dismissed as withdrawn due to there being low tax effect and the question of law has specifically been kept open. Therefore, withdrawal of the special leave petition against the decision of the Delhi High Court in the case of Moser Baer (supra) cannot be held against the revenue.

In view of the above discussion and for the reasons stated above, we are of the opinion that the High Court has committed a grave error in observing and holding that the requirement of furnishing a declaration under Section 10B (8) of the IT Act is mandatory, but the time limit within which the declaration is to be filed is not mandatory but is directory. The same is erroneous and contrary to the unambiguous language contained in Section 10B (8) of the IT Act. We hold that for claiming the benefit under Section 10B (8) of the IT Act, the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under section 139(1) are to be satisfied and both are mandatorily to be complied with. Accordingly, the question of law is answered in favour of the Revenue and against the assessee. The orders passed by the High Court as well as ITAT taking a contrary view are hereby set aside and it is held that the assessee shall not be entitled to the benefit under Section 10B (8) of the IT Act on noncompliance of the twin conditions as provided under Section 10B (8) of the IT Act, as observed hereinabove. The present Appeal is accordingly Allowed. However, in the facts and circumstances of the case, there shall be no order as to costs.”

I have carefully considered the submissions of the parties herein, analyzed the facts and circumstances in this case. The statute is crystal clear as emanating from Section 80IAC(4) r.w.s. 80-IA(7) of the Act that in order to claim deduction u/s. 80IAC, the assessee shall have to file audit report within specified due date referred in Section 44AB of the Act in the relevant specified Form 10CCB as in the case of the assessee, duly signed and verified by such accountant. The assessee while relying on the decision of the Hon’ble Apex Court in the case of CIT Vs. G.M Knitting Industries P. Ltd. (supra) has tried to submit that even though audit was completed but specified Form 10CCB was not filed a/w. return of income within specified due date as per Section 44AB of the Act, it is not a fatal mistake and filing of such Form is only directory in nature and not mandatory, therefore, the claim of the assessee for necessary deduction as per Section 80IAC should be allowed. However, the subsequent decision of the Hon’ble Apex Court as cited very rightly by the Ld. Sr. DR in the case of Pr. Commissioner of Income Tax-III Vs. Wipro Limited (supra) wherein the Hon’ble Apex Court had distinguished the decision in the case of CIT Vs. G.M Knitting Industries P. Ltd. (supra) and held that in order to claim the relevant deduction within the statute the compliance of the provisions of that statute has to be done mandatorily by the assessee and the fiscal statutes have to be interpreted in its strictest sense and there cannot be any liberty provided to the assessee for not following both the substantive and procedural clause within the said statute. Further, in this case, it is noted that there is no representation by the assessee before the Ld. CIT(Appeals)/NFAC, for which, an ex-parte order has been passed considering the documents on record. The provisions of Section 250(4) & (6) of the Act as mandated within the Act has to be complied with by the Ld. CIT(Appeals)/NFAC. Following the rule of consistency in accordance with orders passed by this Bench in the spectrum of an ex-parte order, in my considered view, the matter is therefore restored back to the file of the Ld. CIT(Appeals)/NFAC to examine first and decide whether the assessee had filed audit report in Form 10CCB within the specified due date as per Section 44AB of the Act in compliance to Section 80-IA(7) of the Act. That if it is found that the assessee has not filed Form 10CCB and audit report within the specified due date referred to Section 44AB of the Act, in such scenario, as per ratio-decidendi of the Hon’ble Apex Court in the case of Pr. Commissioner of Income Tax-III Vs. Wipro Limited (supra), no deduction shall be allowed to the assessee. However, as per enquiry by the Ld. CIT(Appeals)/NFAC, if it arrives at the conclusion that the findings of the A.O is incorrect, in such scenario, the deduction may be allowed as per law provided and always only when the relevant provisions are complied with by the assessee both substantive and procedural.

It was also argued by the Ld. Counsel for the assessee quoting para from the judgment of the Hon’ble Supreme Court in the case of Pr. Commissioner of Income Tax-III Vs. Wipro Limited (supra) that 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 be made in computing total income”. Therefore, he submits that the said decision will not be applicable in the case of the assessee.

In this regard, it is held that firstly, the Hon’ble Apex Court referred to these observations in respect of the case laws which were relied on by the assessee and therefore, it cannot be construed in any manner as final finding by the Hon’ble Apex Court. Rather, the ratio-decidendi of the decision as emanating at Para 12 of the said judgment wherein, the Hon’ble Apex Court has laid down clearly that the exemption provisions are to be strictly and literally complied with and the same cannot be construed as procedural requirement. This case dealt with the claim of the assessee regarding benefit u/s.10B(8) of the Act wherein the Hon’ble Apex Court held that the requirement of furnishing a declaration under Section 10B (8) of the IT Act is mandatory, and the time limit within which such declaration is to be filed is equally mandatory and not directory. Therefore, in order to claim benefit u/s.10B(8) of the Act, the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under section 139(1) are to be satisfied and both mandatorily have to be complied with.

Reverting to the facts of the present case as examined aforestated regarding claim of deduction of under Section 80IAC, the relevant provision of Section 80-IA(7) has to be complied with and thus, the audit report a/w. Form 10CCB had to be filed within the due date as specified as per Section 44AB of the Act and these compliances are mandatory. The assessee cannot take shelter in their submission that since they have filed Form 10CCB before passing of the assessment by the A.O and though they have not complied with Section 80-IA(7) still they can get benefit of deduction. Such contention, if allowed, shall dilute the intention of the legislature emanating from the relevant provisions as discussed hereinabove. These areas have to be examined by the Ld. CIT(Appeals)/NFAC and it shall pass a speaking order as per law complying with the principles of natural justice. The assessee shall also respond to the hearing notices from office of the Ld. CIT(Appeals)/NFAC as this is the final opportunity accorded to the assessee. The order of the Ld. CIT(Appeals)/NFAC is set-aside accordingly.

As per the above terms, grounds of appeal raised by the assessee are allowed for statistical purposes.

In the result, appeal of the assessee is allowed for statistical purposes.