2019 (5) TMI 1253 - AT - Income Tax

Deduction u/s 10A - non-filing the report in form No. 56F in original return which was filed with revised return of income - mandatory OR procedural in nature - assessee engaged in the manufacturing business of glass lenses and frames - HELD THAT - It is an undisputed fact that the assessee has filed the report in the prescribed form before the completion of the assessment proceedings u/s 147. Therefore we are of the view that the assessee has sufficiently complied the provisions of section 10A for claiming the deduction. Hence in our considered view, no disallowance in the given facts and circumstances can be made due to non-filing of the report in the form 56F within the time as prescribed for the deduction u/s 10A. As relying on XAVIENT SOFTWARE SOLUTIONS (INDIA) PVT. LTD. VERSUS DCIT, CIRCLE-3, NOIDA 2018 (4) TMI 992 - ITAT DELHI the assessee is entitled to the deduction u/s 10A. - appeal of the assessee is allowed.

Issues Involved:
1. Reopening of assessment proceedings under section 147 of the Income Tax Act.
2. Reopening of assessment based on change of opinion.
3. Disallowance of deduction claimed under section 10A.
4. Non-allowance of deduction under section 10A despite submission of Form 56F.
5. Charging of interest under section 234B.
6. Charging of interest under section 234C.
7. Imposition of penalty under section 271(1)(c).

Issue-wise Detailed Analysis:

1. Reopening of assessment proceedings under section 147 of the Income Tax Act:
The appellant contended that the Commissioner of Income Tax (Appeals) [CIT(A)] erred in confirming the action of the Assessing Officer (AO) in reopening the assessment proceedings under section 147. The reopening was challenged on the grounds of legality and validity, arguing that it was not justified.

2. Reopening of assessment based on change of opinion:
The appellant argued that the CIT(A) erred in confirming the AO's action of reopening the assessment based on a change of opinion. It was contended that the reopening was not based on any new tangible material but merely on a different interpretation of the same facts, which is not permissible under the law.

3. Disallowance of deduction claimed under section 10A:
The primary issue addressed was the disallowance of the deduction claimed under section 10A amounting to ?25,15,494/-. The AO denied the deduction on the grounds that the assessee had not furnished the report in Form 56F within the prescribed time as required under section 10A(5). The CIT(A) upheld this disallowance.

4. Non-allowance of deduction under section 10A despite submission of Form 56F:
The appellant contended that the necessary certificate in Form 56F was duly filed before the completion of the assessment proceedings under section 147, and thus, the provisions of section 10A(5) were complied with. The Tribunal examined the facts and noted that the report was indeed filed during the reassessment proceedings, which should suffice the requirement. Citing the Gujarat High Court’s decision in CIT Vs Gujarat Oil and Allied Industries, it was held that the requirement of filing the report is directory and not mandatory, provided it is submitted before the completion of the assessment.

5. Charging of interest under section 234B:
The appellant challenged the CIT(A)'s confirmation of the AO's action in charging interest under section 234B. This issue was not separately addressed in detail in the judgment, implying that it was not a primary focus of the Tribunal's decision.

6. Charging of interest under section 234C:
Similarly, the appellant contested the charging of interest under section 234C. This issue was also not elaborated upon in the judgment, indicating it was not a central point of contention in the Tribunal’s ruling.

7. Imposition of penalty under section 271(1)(c):
The appellant argued against the CIT(A)'s confirmation of the AO's action in imposing a penalty under section 271(1)(c). This issue was not specifically addressed in the detailed analysis provided in the judgment.

Conclusion:
The Tribunal concluded that the assessee had sufficiently complied with the provisions of section 10A by filing the required report in Form 56F during the reassessment proceedings. Consequently, the disallowance of the deduction under section 10A was not justified. The Tribunal allowed the appeal on this ground, thereby granting the deduction claimed by the assessee. Other grounds related to the charging of interest and imposition of penalty were not the primary focus and were not adjudicated in detail. The appeal was partly allowed, providing relief to the assessee on the main issue of deduction under section 10A.

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