2015 (9) TMI 1685 - AT - Income Tax

Deduction u/s 80IA - proof of manufacturing activities - need for filing of audit report alongwith the return - HELD THAT - As in the assessee s own case 2013 (6) TMI 882 - ITAT INDORE wherein the ITAT has found assessee as eligible for claiming deduction u/s 80IA on Unit-2 relating to manufacturing of micro nutrient fertilizers. Audit report was filed and the requirement of section 80IA(7) has been duly met with. Unit-II was separate and independent unit from the existing unit and the new unit commenced its production during A.Y. 1997- 98. The manufacturing of micronutrient fertilizers even has not been disputed by the Assessing Officer. It is not the case that the unit in dispute is part of earlier unit or its expansion. There is an uncontroverted finding in the impugned order that the assessee was maintaining separate accounts for both the units which are duly audited. Since the assessee has duly fulfilled the requirements of section 80IA(7) of the Act by filing the audit report before framing the assessment we are of the view that the Assessing Officer wrongly disallowed the claim of the assessee. As per provisions of section 80IA(7) requiring filing of audit report alongwith the return is not mandatory rather it is directory and if the audit report is filed at any time before framing the assessment the required conditions are considered to be fulfilled.- Decided in favour of assessee.

Summary

Issues: Disallowance of deduction u/s 80IA

Analysis:
The appeal filed by the assessee challenged the disallowance of the claim of deduction u/s 80IA amounting to Rs. 16,71,579 by the Assessing Officer. The learned CIT(A) granted relief to the assessee based on the decision of the ITAT in the assessee's own case for the assessment year 2003-04, where the ITAT found the assessee eligible for claiming deduction u/s 80IA for Unit-2 manufacturing micro nutrient fertilizers. The relevant portion of the ITAT's order highlighted the independence of Unit-II from Unit-I, both manufacturing different products and controlled by different laws. The ITAT emphasized that the requirement of filing the audit report in Form No. 10CCB along with the return of income is not mandatory but directory, and if filed during assessment proceedings, the conditions of section 80IA(7) are considered fulfilled.

The facts revealed that the assessee, engaged in formulating pesticides and insecticides since 1973-74, set up a new unit in 1997-98 for manufacturing micronutrient fertilizers and claimed deduction u/s 80IA since then. The Assessing Officer disallowed the deduction on the grounds of non-furnishing of the audit report in Form No. 10CCB. However, the learned CIT(A) found that the audit report was filed before framing the assessment, meeting the requirements of section 80IA(7). The Tribunal noted that Unit-II was separate and independent from the existing unit, with separate audited accounts. The Tribunal emphasized that the requirement of filing the audit report along with the return is directory, not mandatory, and can be fulfilled by filing it before the assessment is framed.

The Tribunal upheld the order of the learned CIT(A) based on the precedent set by the ITAT in the previous year, where relief was granted under similar circumstances. Given the consistent facts and legal principles applied, the Tribunal dismissed the appeal of the revenue and sustained the relief granted to the assessee under section 80IA of the Act. The appeal was pronounced dismissed on 21st September 2015.