2013 (7) TMI 87 - HC - Income Tax

Deduction u/s 80-1A - Submission of Audit Report - Assessing Officer denied benefit u/s 80-1A unless report of audit is furnished alongwith the return of income - Held that - emphasis in sub-section (7) of section 80-1A of the Act is to have the claim audited by an accountant, as defined in the explanation below sub-section (2) of section 288 of the Act and not furnishing the report of such audit in the prescribed form duly signed and verified by the accountant alongwith the return of income. - Following the decision of Gujarat Oil & Allied Industries versus I.T.O 1981 (9) TMI 141 - ITAT AHMEDABAD-C - Decided against revenue.

Summary

Issues: Interpretation of Section 80-1A of the Income Tax Act regarding the admissibility of deductions without furnishing the audit report.

Analysis:
1. The judgment revolves around the interpretation of sub-section (7) of Section 80-1A of the Income Tax Act, 1961, which specifies the conditions for the admissibility of deductions derived from an undertaking. The key contention was whether the deduction is permissible if the audit report is not furnished along with the return of income.

2. The Assessing Officer contended that deductions under sub-section (1) of Section 80-1A are not permissible unless the audit report is furnished with the return of income. The court analyzed the language of sub-section (7) and emphasized that the requirement is for the accounts to be audited by a defined accountant and for the audit report to be submitted with the return of income. The court referred to the case of Gujarat Oil & Allied Industries versus I.T.O, highlighting that the audit report must be available to the Assessing Officer at the time of assessment.

3. The Commissioner of Appeals, relying on the Gujarat Oil & Allied Industries case, set aside the Assessing Officer's decision, stating that the non-furnishing of the audit report with the return of income does not automatically disqualify the deductions under Section 80-1A. The court noted that the Tribunal did not consider this aspect, leading to the present appeal.

4. The court reiterated the interpretation from the Gujarat Oil & Allied Industries case, emphasizing that the core requirement under sub-section (7) of Section 80-1A is the audit of the claim by a defined accountant, rather than the submission of the audit report with the return of income. Consequently, the court refused to interfere in the appeal, ultimately dismissing it.

5. In conclusion, the appeal was dismissed, affirming that the emphasis in Section 80-1A is on the audit of the claim by a defined accountant, and the non-furnishing of the audit report with the return of income does not automatically render the deductions inadmissible.