KISHAN GOPAL RUNGTA PVT. LTD.,JAIPUR vs. DCIT, CIRCLE-1, JAIPUR, JAIPUR

4. Aggrieved from the said action of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. Apropos to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below:-

Kishan Gopal Rungta Pvt. Ltd. vs. DCIT “5. I have carefully considered the facts of the case and the submission of the appellant. The ground no. 1 is related to disallowance of deduction u/s 80- IA of Rs. 44,25,650/-.

6. The primary condition to get that deduction the appellant was required get account audited and file form 10CCB with in prescribed time limit. The appellant has not get its accounts audited and also not filed form 10 CCB within prescribed time limit. In this regard for more clarification the undersigned issued notice u/s 250 of the Act dated 04.03.2024 asking for explanation. The relevant part of the notice is reproduced as under - 2. In this regard, it is brought to your notice that Section 80-IA (7) of the Act provides that 80-IA... *(7) The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking 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, along with his return of income, the report of such audit in the prescribed form duly singed and verified by such accountant.

3. In the light of the above, you are hereby required to please furnish your comments and to please explain as to why your appeal should not be dismissed 6.1. In response to the said notice, the appellant has submitted its reply on 08.03.2024. The relevant part of the reply is reproduced as under- Submission 1. From the facts stated above, the only question which arises in the present case is whether non filing of audit report in Form 10CCB electronically before the due date of filing of return would lead to disallowance of the claim of deduction u/s 801A. It is a settled law that obtaining the audit report to claim exemption deduction wherever required by a section is a mandatory requirement but filing of the same is a procedural requirement and therefore, even when such report is filed before the completion of assessment, the requirement of the section as to the filing of the report should be taken as complied with. For this proposition, reliance is placed on the following cases:- Marudhamalai Sri Dhandapani Spinning Mills V. DCIT ITA Ne 11/Chay/2023(Chennai) (PB 8-19) In this case Hon'ble ITAT Chennai Bench held as under- Kishan Gopal Rungta Pvt. Ltd. vs. DCIT 7. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. There is no dispute with regard to the fact that the assessee has filed return of income on 24.10.2017, which is on or before due date prescribed us 139(1) of the Act. It is also an admitted fact that the assessee has claimed deduction u/s 80IA of the Act, in the said return of income filed for the relevant assessment year on or before due date prescribed u/s 139(1) of the Act. Admittedly, the assessee has filed Farm no. 10CCB on 18.03.2018, which is much before the AO issued intimation u/s 143/1) of the Act on 09.03.2919. In other words, the malt report in Form no. 10CCB was made available to the AO before he completes the assessment u/s 143(1). 6.3. The reply submitted by the appellant had been considered however, found not acceptable. As discussed above to claim deduction u/s 80-IA of the Act, the appellant was required to get its accounts audited and file form 10 CCB within prescribed time limit In its reply the appellant itself has accepted that the form 10CCB has not been filed within time limit. The appellant has admitted that it is a settled law that obtaining the audit report to exemption / deduction wherever required by a section is a mandatory requirement but filing of the same is a procedural requirement. The obtaining of audit report has to be evidenced by providing the same to the revenue. But in the instant case, the appellant has not provided the audit report before order u/s 143(1). 6.4. Further, the appellant has cited the order of ITAT, Chennai in the case of Marudhamalai Sri Dhandapani Spinning Mills Vs. DCIT- ITA No. 11/Chny/2023(Chennai). Further, the judgement of Hon'ble Supreme court in the case of "CIT Vs. G.M. Knitting Industries Pvt. Ltd." states that assessee is entitled to deduction u/s 80-IB even though it has not filed the audit report in Form no. 10CCB along with the return but has filed the same before the completion of assessment. However, in the instant case the appellant has not filed form no. 10CCB before the CPC passed order u/s 143(1) in this case. Hence, this case does not cover the issue raised by the appellant squarly. 6.5. As discussed in above paras that the appellant has not get audited its books of accounts and has not filed form 10CCB within due date, which was mandatory condition for claiming deduction u/s 80-IA of the Act. Hence, the disallowance of deduction u/s 80-IA made by the CPC are hereby confirmed. Accordingly, the ground of appeal

raised by the appellant is dismissed.

7. The ground no. 2 is related to credit of TCS. In this ground the appellant has taken plea that CPC has not allowed the credit of TCS which is reflected in 26AS. In this regard the AO is directed to verify the details of TCS and allow the credit of TDS subject to availability in 26AS in accordance with law. Accordingly, this ground of appeal is allowed for statistical purposes.

8. The ground no. 3 is general in nature, hence, not adjudicated and dismissed

5. As the assessee did not find favour, from the appeal so filed before the ld. CIT(A)/NFAC in full, the assessee has preferred the present appeal before this Tribunal on the solitary ground of denial of deduction u/s. 80IA of the Act as the assessee has not filed the required audit report in Form no. 10CCB with in the due date prescribed under the Act. The ld. AR of the assessee in support the ground so raised has filed the written submissions in respect of the various grounds raised by the assessee. The written submission so filed reads as under :

2. The AO (CPC) processed the return u/s 143(1) on 12.01.2020 determining total income at Rs.2,46,29,400/- by disallowing the claim of deduction u/s 80IA of Rs.44,25,650/- for the reason that the assessee has not file Form No.10CCB along with the return of income.

1. It is submitted that the Ld. CIT(A), NFAC has incorrectly held that assessee has not filed audit report in Form No.10CCB before the CPC passed the order u/s 143(1) on 12.01.2020 ignoring the fact that audit report in Form No.10CCB was filed on 22.04.2019. This fact was submitted before Ld. CIT(A), NFAC (PB 2) and the copy of audit report in Form No.10CCB dt. 22.04.2019 was also filed before it (PB 12). Therefore, the disallowance of claim of deduction u/s 80-IA of Rs.44,25,650/- confirmed by it by not considering the correct facts is unjustified.

The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking 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, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant. Thus what is required by section is that the assessee furnishes such report along with the return of income. In the various cases it has been held that obtaining the audit report to claim exemption/deduction wherever required by a section is a mandatory requirement but filing of the same is a procedural requirement and therefore even when such report is filed before the completion of assessment, the requirement of the section as to the filing of the report should be taken as complied with. For this proposition reliance is placed on the following cases:-

CIT Vs. G.M. Knitting Industries Pvt. Ltd. & Anr. (2015) 376 ITR 456 (SC) Assessee is entitled to deduction u/s 80-IB even though it has not filed the audit report in Form No.10CCB along with the return but has filed the same before the completion of assessment.

CIT Vs. Godha Chemicals (P.) Ltd. (2013) 353 ITR 679 (Raj.) (HC) The expression ‘along with return of income’ as occurring in sub- section (4) of section 80HHC is directory in nature in so far as it relates to the time for furnishing of the report of an accountant by the assessee in the prescribed form & even if such a report in the prescribed form is not furnished along with the ROI but is furnished during the course of assessment proceedings, it cannot be removed out of consideration only for the reason of the same having not been filed at the initial stage of filing the return. Therefore, assessee could not be denied the benefit

CIT Vs. Fortuna Foundation Engineers & Consultants Pvt. Ltd. (2017) 152 DTR 236 (All.) (HC) Filing of audit report along with return is not mandatory and only directory and assessee cannot be made to suffer if it filed audit report in Form No.10CCB in the course of assessment proceedings and not along with return.

PCIT Vs. Surya Merchants Ltd. (2016) 143 DTR 116 (All.) (HC) Requirement of sec.80-IB that the audit report should be furnished along with the return is a directory requirement and would stand satisfied if the audit report is furnished during the course of assessment proceedings.

In view of above, when the audit report in Form No.10CCB was filed on 22.04.2019, i.e. before the processing of return u/s 143(1) on 12.01.2020, the Ld. CIT(A), NFAC was incorrect in holding that assessee has not filed in Form No.10CCB before the order passed u/s 143(1) and therefore the AO be directed to allow the claim of deduction u/s 80-IA to the assessee.”

S. Particulars Pg No. Filed before No. AO/CIT(A) 1 Copy of submission filed before Ld. CIT(A) 1-11 CIT(A) 2 Copy of Index of Paper Book filed before ld. 12 CIT(A) CIT(A) 3. Copy of acknowledgement of return along 13-14 Both with computation of total income 4. Copy of Balance Sheet & Profit & Loss 15-22 Both account along with audit report in Form 10CCB Case laws relied upon:

• CIT vs. G.M.Knitting Industries (P) Ltd. & ANR. (2015) 376 ITR 456 (SC) • CIT vs. Godha Chemicals (P) Ltd. (2013) 353 ITR 679 (Raj. H. C) submitted that the view taken by the lower authority is not correct and even the finding of the ld. CIT(A) is without considering the judicial precedent cited by the assessee. The ld. AR of the assessee cited the decision of the apex court in the case of CIT Vs.

G. M. Knitting Industries P. Ltd., [ 376 ITR 456 (SC) ] wherein it was held that deduction u/s. 80IB is allowable even though it has not filed the audit report in form no. 10CCB along with the return of income but has filed the same before the completion of assessment.

The ITR filed by the assessee was processed on 12.01.2020 wherein the deduction claimed by the assessee u/s. 80IA was denied on the reasons that the required audit report was not filed within the due date. The provision as is applicable to the case of the assessee is reproduced herein below :

Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA. (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 the profits and gains derived from such business for ten consecutive assessment years. xxxxx xxxxxxx (7) The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking 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, before the specified date referred to in section 44AB and the assessee furnishes by that date the report of such audit in the prescribed form 85 duly signed and verified by such accountant.

As it is evident from the above provision of the law that the requirement to file the audit report while making the claim is mandatory. The ld. AR of the assessee submitted that non-filing of Form 10CCB along with return of income does not call for rejection of claim of deduction under Section 80IA of the Act, when the assessee has furnished Form No. 10CCB prior to the return of income being processed by the Department under Section 143(1) of the Act. Further, the Counsel for the assessee submitted that Section 80IA of the Act is a "deduction provision" and it is a well settled law that "deduction provision" which have been introduced in the Statute to provide incentive to the assessee should be construed liberally. Further, the Counsel for the assessee relied on several decisions in the written submission so filed. On going through the contents of the order passed by the ld. CIT(A) we observe that the order passed by Ld. CIT(A) has considered the processing of return but in fact the return was processed on 12.01.2020 and audit report was alleged to have been filed on 22.04.2019. This aspect of the matter that when in fact is filed is not clearly proved before us by filling the required receipt or proof therefore, the facts are contradictory and therefore, we feel that the assessee should be given a fair chance to contents the merits of the case before the ld. CIT(A) who will consider the latest decision of apex court in the case of Pr. CIT v. Wipro Ltd. [2022] 140 taxmann.com 223/288 Taxman 491/446 ITR 1 (SC); wherein the court has discussed the case of CIT Vs. G. M. Knitting Industries P. Ltd., [ 376 ITR 456 (SC) ] and consider the correct date of filling the form and thereby consider the claim in accordance with law and judicial precedents as cited.

Order pronounced in the open court on 14/08/2024.

Sd/- Sd/- ¼ jkBkSM deys’k t;arHkkbZ ½ ¼ lanhi xkslkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 14/08/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Kishan Gopal Rungta Pvt. Ltd., Jaipur 2. izR;FkhZ@ The Respondent- DCIT, Circle-01, Jaipur 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File { By order,

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