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Facts
The assessee claimed a deduction of Rs. 44,25,650/- under Section 80-IA for the assessment year 2018-19. The AO (CPC) disallowed this deduction because the assessee did not file the audit report in Form No. 10CCB along with the return of income. The assessee had filed the return of income on time but the audit report was filed later.
Held
The Tribunal noted that the AO disallowed the deduction because the audit report in Form No. 10CCB was not filed along with the return of income, which is a mandatory requirement as per Section 80-IA(7). However, the assessee argued that filing the report before the completion of assessment should be sufficient, citing various judicial precedents. The Tribunal found conflicting facts regarding the exact date of filing of the audit report and its acknowledgment.
Key Issues
Whether the disallowance of deduction under Section 80-IA is justified when the audit report in Form No. 10CCB was filed after the due date for filing the return but before the assessment order was passed.
Sections Cited
143(1), 80-IA, 250, 288, 139(1), 44AB, 80-IB, 80HHC, 80-IA(7)
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Income Tax Appellate Tribunal, JAIPUR BENCHES, “A” JAIPUR
Before: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 609/JP/2024
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “A” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM deys’k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 609/JP/2024 fu/kZkj.k o"kZ@Assessment Year : 2018-19 cuke Kishan Gopal Rungta Pvt. Ltd., DCIT, Vs. Jaipur Circle-01, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAECK 1810 D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. P. C. Parwal (CA) jktLo dh vksj ls@ Revenue by : Sh. A. S. Nehra (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 06/08/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 14/08/2024 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, A.M.
This appeal is filed by the assessee aggrieved from the order of Commissioner of Income Tax, Appeal [Here in after referred as (CIT(A)] for the assessment year 2018-19 dated 22.03.2024, which in turn arises from the order passed by the CPC, Bengaluru passed under Section 143(1) of the Income tax Act, 1961 (in short 'the Act') dated 12.01.2020.
“1. The Ld. CIT(A) has erred on facts and in law in confirming the disallowance of deduction of Rs. 44,25,650/- u/s 80-IA of IT Act, 1961 by incorrectly holding that assessee has not obtained the audit report before the order passed u/s 143(1) of the Act on 12.01.2020 ignoring that audit report in Form No. 10CCB was filed on 22.04.2019. 2. The appellant craves to alter, amend and modify any ground of appeal
.
3. Necessary cost be awarded to the assessee.”
The fact as culled out from the records is that in this case, while processing the return of income filed by the assessee the ld.
AO CPC did not consider the deduction under section 80IA for an amount of Rs. 44,25,650/-. The deduction claimed by the assessee is in relation to solar plant though eligible unit for the deduction under chapter VIA on the grounds that the Form No. 10CCB is not e-filed within due date as prescribed.
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/-.
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.
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 :
The assessee filed the return on 30.10.2018 (PB 13-14) declaring total income of Rs.2,02,03,750/- after claiming deduction under Chapter VI-A of Rs.45,32,250/- which includes deduction u/s 80IA at Rs.44,25,650/-. The assessee has also filed tax audit report as required u/s 44AB of the Act in Form No.3CB & 3CD on 30.10.2018. However, the audit report u/s 80-IA(7) in Form No.10CCB was filed on 22.04.2019 (PB 17-21) vide acknowledgement no. 466121911220419.
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. 3. The Ld. CIT(A), NFAC at Para 6.3 to 6.5 of the order observed that assessee has accepted that Form No.10CCB has not been filed within time limit. The assessee has stated that obtaining the audit report is a mandatory requirement but filing of the same is a procedural requirement but in the present case assessee has not provided the audit report before the CPC passed the order u/s 143(1) and thus the disallowance of deduction u/s 80-IA made by CPC was confirmed.
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.
It is submitted that section 80-IA(7) as relevant for the AY under consideration reads as under:-
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.”
To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions:
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 ld. DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). The ld. DR also submitted that the audit report is signed by the CA on 22.04.2019 so condition is not satisfied as per provision of section 80IA(7) and therefore, the claim of the assessee rightly rejected.
We have heard the rival contentions and perused the material placed on record. The solitary ground raised by the assessee in of section 80IA for an amount of Rs. 44,45,560/-. The reasons as appears from the records are that the assessee has filed the return of income on 30.10.2018 has not filed the required form no. 10CCB along with the return of income. The due date for filling the return of income was 31.10.2018 thus the return of income was filed in time but while filling the return of income the required audit report in Form no. 10CCB was not filed but filed on 22.04.2019. Even the ld.
AR was directed to supply the proof of filling the form but the same was not provided.
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.
Accordingly, looking into the instant facts, in the interest of justice, the matter is being restored to the file of ld. CIT(A) for de- novo consideration and Ld. CIT(A) is directed to pass a fresh order after taking into consideration the relevant judicial precedents on the subject as applicable to assessee's set of facts and then pass Kishan Gopal Rungta Pvt. Ltd. vs. DCIT a speaking order, in accordance with law after considering the date of filling the audit report. In the result, the appeal of the assessee is allowed for statistical purposes.
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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