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Facts
The assessee, engaged in manufacturing and trading textile fabrics and operating a windmill, filed its ITR for AY 2019-20 claiming deduction under section 80IA. The ITR was processed u/s 143(1) and two disallowances were made: Rs. 13,84,511/- for late deposit of employees' PF/ESI contributions u/s 36(1)(va) and Rs. 1,00,98,083/- for deduction u/s 80IA, as Form No.10CCB was filed 6 days after the due date under section 139(1). The JCIT(A) upheld these disallowances.
Held
The Tribunal upheld the disallowance of late deposit of employees' PF/ESI contributions as the appellant did not press this ground. For the 80IA deduction, relying on multiple High Court decisions and a Co-ordinate Bench ruling, the Tribunal held that filing Form No.10CCB by the due date u/s 139(1) is directory and not mandatory. Therefore, the deduction claimed u/s 80IA was allowed, setting aside the JCIT(A)'s order on this point.
Key Issues
Whether the disallowance for late deposit of employees' PF/ESI contributions is justified. Whether the deduction under section 80IA can be denied solely due to the late filing of Form No.10CCB beyond the due date specified u/s 139(1).
Sections Cited
143(1), 36(1)(va), 43B, 80IA, 139(1), 80J(6A)
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Income Tax Appellate Tribunal, DELHI BENCH ‘F’: NEW DELHI
Before: MS. MADHUMITA ROY & SHRI AVDHESH KUMAR MISHRA
Appellant by Ms. Manisha Lahoti, CA Respondent by Ms. Jyoti Verma, Sr. DR Date of Hearing 16/07/2024 Date of Pronouncement 06/08/2024 ORDER
PER AVDHESH KUMAR MISHRA, AM:
The appeal filed by the assessee for the Assessment Year (In short, the ‘AY’) 2019-20 is directed against the order dated 07.03.2024 passed by the Additional/Joint Commissioner of Income Tax (Appeals)- 2, Siliguri [In Short, the JCIT(A)’].
Following grounds have been raised by the appellant/assessee: - “1. The action of the CIT(A) in confirming an addition of Rs. 13,84,511/- made u/s 143(1) being late deposit of employees share of PF/ESI is unjust, illegal, arbitrary, illusory and the addition deserves to be deleted.
2. The action of CIT(A) in upholding the addition of Rs.1,00,98,083/- made u/s 143(1) by not allowing deduction claimed u/s 80IA is unjust, illegal, arbitrary, illusory and deserves to be deleted.
3. The action of lower authorities in disallowing deduction claimed u/s 80IA in intimation passed u/s 143(1) on debatable issue is unjust, illegal, arbitrary, unwarranted and deserves to be deleted.
Prafful Overseas Pvt. Ltd.
That the action of lower authorities in not accepting decided case laws that report in Form 10CCB filed before completion of assessment is to be considered for allowing deduction under 80IA is unjust, illegal, arbitrary and deduction of Rs 1,00,98,083/- may be directed to be allowed.
Appellant craves leave to add, alter, modify or delete any ground of appeal either before or at the time of hearing of the appeal.” 2.1 Here, we are tasked to decide two issues; namely, (i) Disallowance of late deposit of employees’ contributions to PF & ESI under section 36(1)(va) r.w.s. 43B of the Income Tax Act,1961 (in short, ‘the Act’) and (ii) Disallowance of claim of deduction of Rs.1,00,98,083/- under section 80IA of the Act.
3. The relevant facts giving rise to this appeal are that the appellant/assessee, engaged in the manufacturing & trading of textile fabrics and operating windmill for captive use, filed its Income Tax Return (In short, the ‘ITR’) for the relevant year on 31st October, 2019 declaring income of Rs.4,20,58,080/- after claiming deduction of Rs.1,00,98,083/- under section 80IA of the Act. The ITR was processed under section 143(1) of the Act on 11.10.2020; wherein the claim of deductions of (i) Rs.13,84,511/- under section 36(1)(va)and (ii) Rs.1,00,98,083/- under section 80IA of the Act were disallowed on the reasoning that the appellant/assessee did not deposit the employees’ contributions to PF & ESI within the statutory time period and also did not file Form No.10CCB of the Income Tax Rules on or before filing the ITR under section 139(1) of the Act. The appellant/assessee had filed Form No.10CCB on 06.11.2019 i.e. 6 days after filing the ITR
Prafful Overseas Pvt. Ltd. under section 139(1) of the Act on 31.10.2019. On appeal, the appellant/assessee did not succeed; hence, this appeal is before the Tribunal.
4. At the outset, the Ld. Authorized Representative (In short, the ‘AR’) did not press the disallowance of late deposit of employees’ contributions to PF & ESI under section 36(1)(va) r.w.s. 43B of the Act. Hence, this disallowance is upheld and the first ground of appeal stands dismissed.
5. In respect of the disallowance of claim of deduction under section 80IA of the Act, the Ld. AR submitted that the appellant/assessee’s case is duly covered by the decision of the Jurisdictional High Court in the case of Contimeters Electricals Pvt. Ltd. in dated 02.12.2008 wherein the Hon’ble Delhi High Court has held that the filing of audit report in Form No.10CCB along with the ITR before the due date specified under section 139(1) of the Act is directory only and not mandatory. She drew our attention to the relevant para of the decision in the case of Contimeters Electricals Pvt. Ltd. (supra) as under:
“After issuance of the notice the Commissioner of Income Tax passed the order dated 29.03.2007 whereby he held that that he was fully satisfied that the assessment which had been completed by the Assessing Officer was prejudicial to the interest of the revenue and that it was erroneous in as much as the assessee had not satisfied the conditions laid down under Section 80- IA and consequently the deduction under that section for the sum of Rs 14,27,351/- had been wrongly allowed. The CIT, therefore, cancelled the Prafful Overseas Pvt. Ltd. assessment which had been earlier framed and directed the Assessing Officer to complete the assessment as per law, in terms of the directions given in the said order.
Being aggrieved by the said order, the assessee preferred an appeal before the Tribunal which was allowed by the Tribunal by virtue of the impugned order. The Tribunal took the view that the provisions of section 80-IA(7) with regard to filing of the audit report along with the return were not mandatory and were merely directory. In coming to such conclusion, the Tribunal referred to the decision of the Gujarat High Court in CIT v. Gujarat Oil & Allied Industries, 201 ITR 325 (Guj). In that decision the provisions of Section 80J(6A) were considered. The wording of Section 80J(6A) is similar to that of section 80-IA(7) which is in issue in the present appeal. The Gujarat High Court took the view that the word „shall‟ which occurs in section 80J(6A) be read as „may‟ and that the requirement of filing of an audit report along with the return was only to be taken as directory in nature. The Gujarat High Court took the view that in case the audit report is submitted at any time before the framing of the assessment, there would be substantial compliance with the provisions of Section 80J(6A).
The Tribunal also relied on the decision of the Madras High Court in CIT v. A.N. Arunachalam, 208 ITR 481 (Mad), which, again, while considering the provisions of Section 80J(6A), took the same view as that of the Gujarat High Court.
We notice that there are other decisions of other Courts taking the same view. The decisions being, CIT v. Shivanand Electricals (1994) 209 ITR 63 (Bombay); Zenith Processing Mills v. CIT (1996) 219 ITR 721 (Guj.); CIT v. Jayant Patel (2001) 248 ITR 199 (Mad) and CIT v. Mahalaxmi Rice Factory (2007) 294 ITR 631 (P&H).
In view of this long line on decisions of various High Courts in considering the provisions of Section 80J(6A) which are similar to the provisions of Section 80-IA(7), we feel that the Tribunal has arrived at the correct conclusion that the requirement of filing the audit report along with the return is not mandatory but directory and that if the audit report is filed at any time before the framing of the assessment, the requirement of section 80-IA(7) would be met.”
5.1 The Ld. AR drew our attention to the fact that the claim of deduction under section 80IA of the Act, in the case of the assessee itself, was allowed in subsequent year under section 143(3) of the Act.In this context, it was submitted that the appellant/assessee 4
Prafful Overseas Pvt. Ltd. deserved allowance of claim of deduction under section 80IA of the Acton merit. The disallowance was made only on the reasoning the Form No.10CCB was not filed along with the ITR on or before 31.10.2019. It was argued by the Ld. AR that the delay in filing Form No.10CCB would not only decide the fate of deduction under section 80IA of the Act. To buttress her arguments, the Ld. AR drew our attention to the decision of the Hon’ble Madras High Court in the case of AKS Alloys Pvt. Ltd. 18 taxmann.com 25 and to the decision of the Hon’ble Supreme Court in the case of GM Knitting Industries Pvt. Ltd. 71 taxmann.com 35. It was also submitted that the Co-ordinate Bench, in the case of Sanjay Kukreja in had decided this issue, vide order dated 30.01.2024, in the favour of the taxpayer and the facts of the case of the appellant/assessee were similar to that case and this case therefore,was duly covered by the decision of the Co- ordinate Bench in the case of Sanjay Kukreja (supra).
The Ld. Senior Departmental Representative (In short, the ‘Sr. DR’) placed reliance on the order of the Ld. JCIT(A).
We have heard both the parties and perused the material available on the record. The one and only issue before us for adjudication is that whether the Form No.10CCB is required to be filed mandatorily along with the ITR on or before the due date specified Prafful Overseas Pvt. Ltd. under section 139(1) of the Act for claiming deduction under section 80IA of the Act.
In view of the above, we are of the considered opinion that this case is squarely covered by the decision of the Co-ordinate Bench in the case of Sanjay Kukreja in the ITA No. 652/Del/2023. Hence, based on the reasoning given in the case of Sanjay Kukreja, it is held that the appellant/assessee is justified in claiming the deduction under section 80IA of the Act. Accordingly, the JCIT(A)’s order is set aside and the deduction under section 80IA of the Act is allowed. Consequential grounds of appeal
in this regard are allowedaccordingly.
9. The appeal stands partly allowed as above. Order pronounced in open Court on 06 August, 2024.