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Facts
The assessee, engaged in power generation and distribution, claimed deduction under Section 80IA(4)(iv)(a) for Assessment Year 2020-21. The return was processed, and the deduction was disallowed because the audit report in Form 10CCB was filed after the due date. The assessee's rectification application was rejected, and the CIT(A) upheld the disallowance.
Held
The Tribunal held that the delay in filing Form 10CCB, which was a meager 14 days, could be condoned. Relying on various High Court decisions, the Tribunal concluded that the delay did not make the claim fatal, especially since the form was filed before the completion of the assessment and other conditions for the deduction were met.
Key Issues
Whether the delay in filing the audit report in Form 10CCB beyond the specified due date warrants disallowance of the deduction claimed under Section 80IA(4)(iv)(a) of the Income Tax Act, 1961.
Sections Cited
80IA(4)(iv)(a), 143(1), 250, 154, 44AB, 80IA(7)
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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI OMKARESHWAR CHIDARA, AM
O R D E R Per Kavitha Rajagopal, J M:
The captioned appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2020-21.
The assessee has challenged the order of the ld. CIT(A) on the ground that the ld. CIT(A) has erred in conforming the intimation dated 25.12.2021 issued by Central Processing Centre ('CPC' for short)/Assessing Officer ('A.O.' for short) u/s.143(1) of the Act. The assessee has also challenged the disallowance of section 80IA(4)(iv)(a) on the ground that the assessee had belatedly filed the audit report in Form 10CCB by way of additional ground. The assessee in ground nos. 3 & 4 had challenged the computation u/s. additional ground raised by the assessee. As this ground does not require any further verification, we deem it fit to admit this ground on the basis of the arguments advanced by both sides and by relying on the decision of the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. vs. CIT [1998] 229 ITR 383 (SC). We hereby admit the additional ground for adjudication.
The brief facts are that the assessee is a partnership firm engaged in the business of generation and distribution of power and has installed windmills through which the said business is carried on. The assessee had filed its return of income dated 28.01.2021 for the year under consideration, declaring total income at Rs.28,25,330/- after making deduction u/s. 80IA(4)(iv) of the Act and the same was processed u/s. 143(1) of the Act and the CPC/A.O. vide intimation dated 25.12.2021 disallowed the disallowance claimed by the assessee u/s. 80IA amounting to Rs.48,35,326/- and thereby determined the total income at Rs.75,60,650/-. The assessee then filed a rectification application u/s. 154 of the Act which was rejected by the ld. A.O. vide order dated 26.12.2022.
The assessee then preferred an appeal before the first appellate authority, challenging the said disallowance along with the other grounds of appeal. The ld. CIT(A) upheld the order of the ld. A.O.
5. Aggrieved the assessee is in appeal before us, challenging the order of the ld. CIT(A).
The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee’s claim of deduction u/s. 80IA(4)(iv) of the Act was not 3 (A.Y. 2020-21) Tapti Exports vs. Dy. CIT allowed by the CPC for the reason that the audit report in Form No. 10CCB was filed after the due date specified in section 44AB of the Act. The ld. AR further contended that the assessee was eligible to claim deduction u/s. 80IA(4)(iv)(a) of the Act and has been claiming the said deduction in the earlier years also. The ld. AR relied on the decision of the Hon'ble Jurisdictional High Court in the case of Al Jamia Mohammediyah Education Society vs. CIT & Union of India (in Writ Petition No. 1689 of 2024 vide order dated 15.04.2024) where the delay in filing Form No. 10B was condoned. The ld. AR also relied on the decision of Kedar Nath Saraf Charity Trust vs. DDIT [2024] 161 taxmann.com 671 (Kolkata-Trib)
The learned Departmental Representative ('ld.DR' for short), on the other hand, controverted the said fact and stated that the provisions clearly mandates that the audit report has to be filed within the specified date which has not been adhered to by the assessee. The ld. DR further stated that the said condition is mandatory and not discretionary. The ld. DR relied on the order of the ld. CIT(A).
We have heard the rival submissions and perused the materials available on record. It is not in dispute that the assessee’s business is eligible for claiming deduction u/s. 80IB(4)(iv)(a) of the Act and the eligibility criteria for the same is by submitting Form No. 10CCB as per Rule 18BBB of the I. T. Rules. It is also observed that section 80IA(7) of the Act entitles that any deduction u/s. 80IA(1) can be claimed only when the assessee’s account is audited by an Accountant and that the said audit report as per Form No. 44AB has to be furnished by the assessee before the due date specified in section 44AB of the Act. The relevant extract of the said provisions shall be cited hereunder for ease of reference:
4 (A.Y. 2020-21) Tapti Exports vs. Dy. CIT 80IA. Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent. of profits and gains derived from such business for ten consecutive assessment years. (7) [The deduction] [ Substituted by Act 20 of 2002, Section 33, for " Where the assessee is a person other than a company or a cooperative society, the deduction" (w.e.f. 1.4.2003).] under sub-section (1) from profits and gains derived from an [undertaking] [ Substituted by Act 14 of 2001, Section 44, for certain words (w.e.f. 1.4.2002).] shall not be admissible unless the accounts of the [undertaking] [Substituted by Act 14 of 2001, Section 44, for certain words (w.e.f. 1.4.2002).] for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, alongwith his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant.
44AB. Audit of accounts of certain persons carrying on business or profession. Every person,—(a)carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year [***]:[Provided that in the case of a person whose—(a)aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent of the said amount; and(b)aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent of the said payment, this clause shall have effect as if for the words "one crore rupees", the words "[ten] crore rupees" had been substituted:][Provided further that for the purposes of this clause, the payment or receipt, as the case may be, by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the payment or receipt, as the case may be, in cash; or](b)carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year; or(c)carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or(d)carrying on the profession shall, if the profits and gains from the profession are deemed to be the profits and gains of such person under section 44ADA and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; or(e)carrying on the business shall, if the provisions of sub- section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year, get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed :Provided that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year: Provided further that this section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BBA, on and from the 1st day of April, 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later :Provided also that in a case where such person is required by or under any other law to get his accounts audited , it shall be sufficient compliance with the provisions of this section if such person gets the accounts
5 (A.Y. 2020-21) Tapti Exports vs. Dy. CIT of such business or profession audited under such law before the specified date and furnishes by that date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this section. Explanation.—For the purposes of this section,—(i)"accountant" shall have the same meaning as in the Explanation below sub-section (2) of section 288;(ii)"specified date", in relation to the accounts of the assessee of the previous year relevant to an assessment year, means [date one month prior to] the due date for furnishing the return of income under sub-section (1) of section 139.
On perusal of the above provision, it is evident that the audit report as per section 44AB of the Act has to be filed one month prior to the due date for furnishing of return of income u/s. 139(1) of the Act, whereas in this case the said due date for filing of the return was extended to 15.02.2021. It is observed that the assessee has filed its return of income and the tax audited report before the extended due date but Form No. 10CCB for the two units for which the assessee was claiming deduction u/s. 80IA were filed on 29.01.2021, evidencing that the Form No. 10CCB were filed after the specified date and after the filing of the return of income. The ld. CIT(A) disallowed the claim of the assessee for the reason that the due date specified under the relevant provision are held to be mandatory and not discretionary and since the assessee had not complied with the same, the assessee claim u/s. 80IA was denied by the lower authorities.
The ld. AR had relied on the decision of Hon'ble Jurisdictional High Court in the case of Al Jamia Mohammediyah Education Society (supra), wherein the Hon'ble High Court has condoned the delay in filing Form 10B in which case, the Hon'ble Gujarat High Court has relied on the decision of the Hon'ble High Court in the case of Sarvodaya Charitable Trust vs. ITO (Exemption) [2021] 125 taxman.com 75 (Guj). It is also pertinent to point out that the Hon’ble Madhya Pradesh High Court in the case of CIT vs. Panama Chemicals Works [2007] 165 Taxman 135 (MP) on identical facts has condoned the delay in filing Form 10CCB belatedly after filing the return of income but before Form 10CCB on 29.01.2022 which was much before the extended due date for filing of return, i.e., 15.02.2021. The relevant extract of the said decision is cited hereunder for ease of reference:
The Tribunal in meeting this question, brushed aside the objection and following the judgment of the Gujarat High Court in CIT v. Gujarat Oil & Allied Industries’ case (supra) maintained the order passed by CIT(A). Learned counsel for the revenue has invited our attention to the judgment in CIT v. Shivanand Electronics [1994] 209 ITR 631 (Bom.) and to the passage which reads as under : "...When the Legislature casts a duty on the assessee claiming a certain benefit, to comply with the requirements which are associated with such benefit, the assessee cannot get the benefit without doing his part of the duty. He cannot be allowed to say that it was for the Income-tax Officer to ask him to do so. If the assessee does not do his part of the statutory duty, the Income- tax Officer may proceed to decide the allowability or otherwise of the relief on the basis of the facts and material available before him. . . . The position may, however, be different where an assessee does a particular act not within the specified time but after the expiry hereof and makes an application for condonation of delay. In such cases, depending on the language of the statute and the object sought to be achieved by prescribing the time-limit, it would be the duty of the officer to consider the documents, even submitted belatedly, if there is reasonable explanation for the delay. . . . ." (p. 70) 6.Form No. 10CCB provides for submission of audit report under sections 80-I(7), 80-IA(7), 80-IB and 80-IC. The question that falls for our consideration is as to whether the requirement of submission of Form No. 10CCB is mandatory or directory. As observed by the Bombay High Court, the requirement of filing the report is mandatory and failure to file it is fatal. But that is not so insofar as the requirement of filing it along with the return is concerned. If, in a given case, the assessee fails to file such report along with the return and files it subsequently, but before completion of the assessment, it will not be fatal to the claim of the assessee and the ITO will have the power to accept the same if he is satisfied that the delay in filing the same was for good and sufficient reasons. It is not disputed that return was filed in time. The question that has been raised is as to what would be the effect if Form No. 10CCB is filed later on during pendency of the assessment. It is not disputed that the report in the prescribed Form No. 10CCB was filed by the assessee before completion of the assessment. It is, therefore, clear that the assessee complied with all the provisions of law except that in submission of Form No. 10CCB, there was delay. 7. We are of the view that even if an assessee fails to file information in Form No. 10CCB along with the return, he cannot be divested of the benefit of section 80-I. It is not a case where the form was filed after the assessment, but before it and, therefore, when the authorities assessed the income, the form was before the Assessing Officer. Under these circumstances, we find that the approach of the CIT(A) and the Tribunal was proper. 8. Even in the judgment of Shivanand Electronics’ case (supra), Their Lordships of the Bombay High Court have observed that the position may be different when an assessee does a particular act not within the specified time but after the expiry thereof and makes an application for condonation of delay. In such cases, depending on the language of the statute and the objects sought to be achieved by prescribing the time-limit, it would be the duty of the officer to consider the documents, even submitted belatedly. Thus, this decision also supports the view that even if the prescribed form is submitted belatedly, the Assessing Officer has to proceed on the basis of the claim made.
7 (A.Y. 2020-21) Tapti Exports vs. Dy. CIT 9. We, therefore, hold that in the facts and circumstances of the case, the Tribunal was justified in law in holding that the claim of the assessee under section 80-I is justified even if he had not filed the audit report in Form No. 10CCB along with the return. We, therefore, answer the question against the revenue and in favour of the assessee.
From the above decision, it is evident that various courts has held that the delay in filing Form 10CCB could be condoned when the assessee has satisfied the other criteria for claiming deduction u/s. 80IA of the Act and since there is a meager delay of 14 days, the same shall be condoned by respectfully following the judicial precedence cited hereinabove. We hereby allow ground no. 2 and the additional ground raised by the assessee.
As ground no. 1 is general and ground no. 3 & 4 being not pressed by the ld. AR, requires no separate adjudication.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 25.07.2024.