ASSISTANT COMMISSIONER OF INCOME TAX, DELHI vs. SRIKARAM PRESCIENCE PRIVATE LIMITED, DELHI

This appeal preferred by the Revenue is directed against the order of the ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [for short ‘the ld. CIT (E)] dated 11.03.2025 for Assessment Year 2014-15 raising following grounds of appeal :- “1. Whether on facts and circumstances of the case, the Ld. CIT(A) has erred in allowing the deduction claimed u/s 10AA of the Act amounting to Rs.1,95,51,897/- holding that furnishing of Form No.56F is mandatory alongwith the return of income.

Whether on facts and circumstances of the case, the Ld. CIT(A) has failed to notice that as per provisions of section 10AA(8) read with 2 section 10A(5) of the Income Tax Act, 1961 the filing of Form 56F is mandatory on or before the due date for submitting audit report u/s 44AB of the Income Tax Act which admittedly the assessee has failed to file.”

At the time of hearing, none appeared on behalf of the assessee. Hence, we are proceeding to decide the appeal with the assistance of ld. DR of the Revenue. 3. The only issue involved in this appeal is as per provisions of section 10AA(8) read with section 10A(5) of the Income Tax Act, 1961 (for short ‘the Act’), whether the filing of Form 56F is mandatory on or before the due date for submitting audit report u/s 44AB of the Act. 4. Considered the submissions of the ld. DR of the Revenue and material available on record. We observe the submissions made by the assessee before the ld. CIT (A) wherein he submitted that the Assessing Officer has erred in law and on the facts and circumstances of the case in disallowing exemption of Rs.1,95,51,897/- claimed u/s 10AA by the assessee on account of non-efiling of audit report u/s Form 56F alongwith the return of income, though the hard copy of Form 56F and copy of electronically filed Form 56F on 17.08.2018 have been duly filed with the Assessing Officer at the time of assessment proceedings for the year under consideration. It was further submitted that the Assessing Officer denied the benefit of deduction u/s 10AA to the assessee was with regard to non-filing of Form 56F electronically which is not a valid objection and on this ground, the assessee cannot be denied benefit of deduction u/s 10AA as provision regarding filing of audit report in Form 56F along with return of income which is directory in nature and not mandatory and 3 audit copy furnished before the Assessing Officer even during the course of assessment proceedings. In this regard, assessee relied on various judgments before the ld. CIT (A) and submitted that audit report in Form 56F was duly filed with the Assessing Officer before the completion of the assessment proceedings, benefit of deduction u/s 10AA of the Act cannot be denied merely on the ground that the same was not filed electronically along with the return of income and accordingly requested to delete the addition. After going through the detailed submissions of the assessee and various judgments on this issue, ld. CIT (A) partly allowed the appeal of the assessee. 5. We observe that AO disallowed assessee's claim of deduction under section 10AA on account of assessee's failure to file mandatory audit report in Form 56F along with return, however ld. CIT (A) allowed the claim of the assessee by observing that on this ground, assessee cannot be denied the benefit of deduction. We further observe that before the ld. CIT (A), the assessee contended that filing of Form 56F is procedural and directory in nature and Form 56F was filed during the assessment proceedings. We observe that before ld. CIT (A), assessee also contended that as Form 56F satisfied statutory requirements, the procedural delay in its filing should not override substantive compliance. We find force from the decision of Hon’ble Gujarat High Court in the case of CIT v. Gujarat Oil and Allied Industries 1993 TaxPub (DT) 643 (Guj-HC) wherein it is held that procedural non-compliance should not override substantive compliance, if required documents are submitted before completion of assessment. Further, Co-ordinate Benches of Tribunal in the 4 cases of Asstt. CIT v. Vishnu Export 2023 TaxPub(DT) 2175 (Ahd- Trib) and Arvind Kumar Agarwal v. ITO 2023 TaxPub(DT) 2468 (Del-Trib), also emphasized that provisions of section 10AA should be construed liberally to advance legislative intent of promoting SEZs. In instant case, Form 56F was submitted well before issuance of intimation under section 143(1), which established that necessary certification was available on record at the time of processing. The legislative intent behind section 10AA is to promote exports and economic activity in SEZs, and procedural delays should not defeat substantive claims, particularly when required documentation is on record before completion of assessment. Hence, the disallowance was not justified, as delay in filing Form 56F was procedural lapse. Accordingly, we are inclined not to disturb the well-reasoned findings of the ld. CIT (A) and accordingly dismiss the grounds raised by the Revenue. 6. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on this 25th day of September, 2025 after the conclusion of the hearing. (SATBEER SINGH GODARA) ACCOUNTANT MEMBER