2018 (6) TMI 1831 - AT - Income Tax

Deduction u/s 80IE - Tax Audit Report alongwith Form No. 10CCB were filed before the AO manually whereas it is mandated by Income Tax Act rules to file relevant tax audit report and Form 10CCB electronically - HELD THAT -As not disputed that the assessee filed the requisite tax audit report in Form No. 10CCB during the course of assessment proceedings and before the assessment order was passed by the AO. The Hon ble Madras High Court in case of CIT vs. AKS Alloy Pvt. Ltd. 2011 (12) TMI 39 - MADRAS HIGH COURT while considering an identical issue of not filing of audit report in Form 10CCB along with return of income but filed the same before the assessment was completed held that filing of audit report along with the return was not mandatory but directory and that if the audit report was filed at any time before the framing of the assessment, the requirement of the provisions of the Act should be held to have been met. The order of Hon ble Madras High Court has been affirmed by the Hon ble Supreme Court in case of CIT vs. G.M. Knitting Industries (P.) Ltd. 2015 (11) TMI 397 - SC ORDER - Decided against revenue.

Issues:
1. Allowability of deduction U/s 80IE for not filing audit report electronically.
2. Interpretation of provisions of Section 80IE(6) r.w.s. 80IA(7) of the IT Act.
3. Compliance with Rule 12(2) of the Income Tax Rules regarding electronic filing of audit report.
4. Precedents on filing audit report in Form No. 10CCB before completion of assessment.
5. Admissibility of deduction U/s 80IE despite not filing audit report along with return of income.
6. Comparison with decisions of Hon'ble Supreme Court and High Courts on similar issues.

Analysis:
1. The case involved the allowability of deduction U/s 80IE for not filing the audit report electronically along with the return of income. The Revenue challenged the decision of the ld. CIT(A) to allow the deduction based on the timing of filing the tax audit report and Form No. 10CCB during the assessment proceedings.

2. The Revenue argued that as per Section 80IE(6) r.w.s. 80IA(7) of the IT Act, the audit report must be filed electronically with the return of income. Reference was made to Rule 12(2) of the Income Tax Rules to support the contention that electronic filing of Form No. 10CCB is mandatory for claiming the deduction.

3. Conversely, the assessee contended that the tax audit report and Form No. 10CCB were filed during the assessment proceedings, justifying the deduction U/s 80IE. The assessee relied on judicial precedents, including the decision of the Hon'ble Supreme Court in CIT vs. G.M. Knitting Industries, to support the argument that filing the necessary documents before the final assessment order suffices for claiming deductions.

4. The Tribunal considered the submissions and referred to the judgment of the Hon'ble Madras High Court in CIT vs. AKS Alloy Pvt. Ltd., which emphasized that filing the audit report before the completion of assessment is acceptable. The Tribunal highlighted similar views from various High Courts, reinforcing the principle that filing the audit report along with the return of income is directory, not mandatory.

5. Notably, the Tribunal observed that the eligibility of the assessee for deduction U/s 80IE was not in dispute, and the only reason for disallowance by the AO was the non-filing of the audit report with the return of income. Given the precedents and legal interpretations, the Tribunal upheld the decision of the ld. CIT(A) to allow the deduction, as the necessary documents were filed before the final assessment order.

6. Ultimately, the Tribunal dismissed the appeal of the Revenue, citing the binding precedents and legal principles relied upon by the ld. CIT(A) in allowing the deduction. The decision aligned with the interpretations of various High Courts and the affirmation by the Hon'ble Supreme Court in similar cases, emphasizing the importance of timely filing of audit reports for claiming deductions under the IT Act.

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