2015 (1) TMI 395 - HC - Income Tax

Deduction u/s 80IA - Whether on the facts and in the circumstances of the case the Tribunal was right in allowing the deduction especially when the assessee has not filed audit report in Form 10CCB along with the return nor before the date of completion of the assessment - Held that - filing of the audit report along with the return, as contemplated under section 32AB(5) of the Act, is only directory and not mandatory. Hence, finding no substantial question of law arising for consideration - Following decision of Commissioner of Income Tax v. AKS Alloys (P) Ltd. 2011 (12) TMI 39 - MADRAS HIGH COURT - Decided against Revenue.

Summary

Issues:
1. Whether the filing of an audit report in Form 10CCB along with the return is mandatory for allowing deductions under the Income Tax Act?

Detailed Analysis:
The High Court of Madras addressed the issue of whether the filing of an audit report in Form 10CCB along with the return is mandatory for allowing deductions under the Income Tax Act. The Revenue challenged the order of the Income Tax Appellate Tribunal, arguing that the Tribunal was wrong in allowing the deduction when the assessee had not filed the audit report along with the return or before the completion of the assessment for the year 2005-2006. The respondent's counsel cited previous decisions where it was held that filing the audit report along with the return is not mandatory but directory.

The court referred to various judicial precedents to support its decision. In the case of Commissioner of Income Tax v. AKS Alloys (P) Ltd., it was held that filing the audit report along with the return was not mandatory but directory. Similarly, in Commissioner of Income Tax v. Jayant Patel, where the audit report was produced before the appellate authority, it was observed that the filing of the audit report along with the return is directory and not mandatory. The court stated that the appellate authority has the power to direct the Assessing Officer to receive and consider the audit report even if filed before the appellate authority.

Furthermore, in Commissioner of Income Tax v. Print Systems & Products, the court emphasized that the filing of the audit report along with the return, as per Section 32AB(5) of the Income Tax Act, is directory and not mandatory. The court highlighted that the timing of filing the audit report is not specified, and the assessee can delay filing the return until the audit report is available. The court also referenced a Full Bench decision of the Punjab and Haryana High Court, which concluded that the submission of the audit report is directory, not mandatory, and the Assessing Officer has the discretion to entertain the audit report even if not filed with the return.

Based on the consistent view of the High Court of Madras, the court held that the filing of the audit report along with the return is only directory and not mandatory. Consequently, the appeal was dismissed, answering the question of law against the Revenue and in favor of the assessee. The court reiterated that the filing of the audit report along with the return is not a mandatory requirement for allowing deductions under the Income Tax Act.