2020 (5) TMI 51 - AT - Income Tax

Deduction u/s 80IC - assessee did not file the Form No. 10CCB - assessee firm derives income from manufacturing of Electrical lamps - HELD THAT - Provision for submission of audit report along with return are not mandatory and that the audit report can be entertained during the assessment proceedings . Issue is covered in favour of the assessee by the aforesaid decision of the Hon'ble jurisdictional High Court in CIT vs Punjab Financial Corporation 2001 (12) TMI 50 - PUNJAB AND HARYANA HIGH COURT . Considering the facts of the case, the issue is decided in favour of the assessee accordingly. Deduction u/s 80IC - @25% as against 100% claimed by the assessee on account of substantial expansion of the Unit - HELD THAT - Hon'ble Apex Court in the case of M/s Aarham Softronics 2019 (2) TMI 1285 - SUPREME COURT and find that the Hon'ble Apex Court dealt with the entire scheme of the Act relating to the relevant section i.e. section 80IC of the Act, and arrived at the conclusion that the definition of the initial assessment year contained in clause (v) of sub-section(8) of section 80IC of the Act can lead to a situation where there can be more than one initial assessment year within the said period of ten years Since in the present case the fact that the assessee had undertaken substantial expansion is not disputed, the assessee, we hold, is entitled to claim deduction @ 100% of its eligible profits for five years from the initial year of substantial expansion even though the assessee has already claimed deduction of the profits at the rate of 100% for first five years subject to the condition that the total period of deduction u/s 80IC will not exceed 10 years from the initial year of commencement of unit - Thus, this issue is decided in favour of the assessee.

Summary

Issues involved:
1. Disallowance of deduction under Section 80IC for non-filing of Form No. 10CCB.
2. Denial of deduction under Section 80IC @ 100% for substantial expansion of the unit.

Analysis:

Issue 1: Disallowance of deduction under Section 80IC for non-filing of Form No. 10CCB
The assessee claimed a deduction under Section 80IC but the Assessing Officer disallowed it due to non-filing of Form No. 10CCB. The CIT(A) upheld this decision. However, the assessee argued that the form was filed during the assessment proceedings and relied on a High Court decision. The ITAT held that the audit report submission with the return is not mandatory, and it can be submitted during assessment proceedings. Citing the High Court decision, the ITAT ruled in favor of the assessee, allowing the deduction under Section 80IC.

Issue 2: Denial of deduction under Section 80IC @ 100% for substantial expansion of the unit
The CIT(A) restricted the deduction under Section 80IC to 25% instead of the 100% claimed by the assessee for substantial expansion of the unit. The assessee referred to a Supreme Court decision in their favor. The ITAT confirmed that the Supreme Court decision allowed 100% deduction for substantial expansion within the 10-year period. The ITAT analyzed the Supreme Court's findings and concluded that the assessee was entitled to claim 100% deduction for five years from the initial year of substantial expansion, within the 10-year deduction period. The ITAT ruled in favor of the assessee, allowing the deduction at 100% for the substantial expansion period.

In conclusion, the ITAT allowed the appeal of the assessee, granting the deductions under Section 80IC for both the non-filing of Form No. 10CCB and the substantial expansion of the unit, based on the legal precedents and provisions cited during the proceedings.