THE ACIT, CIRCLE-4,, BARODA vs. M/S. ZEST AROMAS PVT. LTD.,, BARODA

The revenue has raised following ground of appeal:- “1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance u/s 80IB of the Act by holding that the Assessing Officer had not found out any discrepancy in the claim of deduction made by the assessee u/s 80IB of the Act on the basis of form No. 10CCB during the remand proceedings without appreciating the fact that the Assessing- Officer in his remand report had merely stated the observation contained in the report and not admitted on merit, the issue of deduction u/s 80IB of the Act.”

In this case, assessment u/s. 143(3) of the act was finalized vide order dated 22nd December, 2008 determining the total income at Rs. 1,75,94,778/-. The aforesaid order was subsequently set aside by the ld. CIT-2, Baroda vide his order u/s. 263 dated 25th March, 2011 on the reasonoing that the assessee has not filed form no. 10CCB for claiming deduction u/s. 80IB of the act. In view of the above reason the CIT-2, Baroda vide order u/s. 263 held that the assessment order passed u/s. 143(3) by the assessing officer was erroneous ad prejudicial to the interest of the revenue. The ITAT had upheld the order of the CIT passed u/s. 263 directing the assessing officer to make a fresh assessment and also issued following directions:- "It is dear from the above that the audit report was to be filed by the assessee in case it is demanded by the AO during the assessment proceedings. In this case, there is no evidence to show that the AO demanded the audit report before deciding the issue of allowability of deduction u/s. 80/8 of the Act. As per the requirements of section 80IA(7) read with section 80IB(13) and rule 18IB(13) and rule 18BBB, no deduction u/s 80IB will be admissible unless the audit report of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed, have been audited by an Accountant and the report of such audit in prescribed form duly signed and verified by such Accountant is furnished. Since in this case, deduction u/s 80IB has been allowed by the AO admittedly without such report, we have no hesitation in holding that the learned CIT was justified In holding the order of the AO as erroneous in so far as it was prejudicial to the interests of Revenue. Therefore, invocation of provisions of section 263 of the Act by the learned CIT, cancelling the assessment order and directing the AO to make a fresh assessment is hereby upheld. Before we depart, it is made clear that since the audit report has been filed by the assessee before the learned CIT during 263 CIT during 263 proceedings and has also been filed before us, we are of the view that the AO while framing the fresh assessment,

Aggrieved against the order of the assessing officer, the assessee preferred appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee.

We have heard rival contention and perused the material on record carefully. We have noticed that Co-ordinate Bench of the ITAT has directed that assessing officer to examine the admissibility of the claim of deduction u/s 80IB ater taking into consideration the audit report filed before the Ld. CIT. Therefore, the ld. CIT(A) has asked the assessing officer to examine the issue of allowable of deduction on merit after examination of the report on form no. 10CCB during the remand proceedings. The Ld. CIT(A) has allowed the appeal of the assessee by stating that the assessing officer has not reported any discrepancy in the claim of deduction made by the assessee u/s. 80IB of the act in the remand report. After considering the above facts and detailed findings of the Ld. CIT(A), we do not find

In the result, the appeal of the revenue is dismissed.