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2020 (12) TMI 496 - AT - Income TaxExemption u/s 10A - claim not made by assessee in its return f income filed in the Income Tax Department - assessee-company has not furnished the prescribed report in Form No.56 along with return of income - AO denied the part of carry forward losses to be set off in the current year - HELD THAT - Assessee as otherwise eligible for claim of deduction u/s.10A, which assessee had not claimed at the time of filing of return, because same was filed at NIL income after setting of carried forward losses - Even though the Tribunal in the Assessment Years 2004-05 and 2005-06, has decided the issue in favour of the assessee, it will only go to enhance the losses to be carried forward and consequently the income of the assessee will reduce to nil. Once assessee s income is liable for deduction u/s.10A for which assessee is otherwise eligible and also has made due compliance by filing Form No.56F and relevant audit report. If that is so, then claim of deduction u/s.10A is to be allowed and we do not find any legal infirmity in the order of the Ld. CIT (A) in allowing the deduction u/s.10A in the light of Form No.56F. In that case, the assessment made by the Assessing Officer will be subjected to 100% deduction u/s.10A and the assessed income would be Nil - Decided against revenue.
Issues:
1. Allowance of exemption u/s 10A without proper documentation. 2. Disallowance of claim of deduction u/s 10A due to lack of audit report. 3. Requirement of producing evidence during assessment proceedings. 4. Appeal against the order of the Ld. CIT (A). 5. Dispute regarding setting off of carried forward losses. Issue 1: Allowance of exemption u/s 10A without proper documentation The Revenue challenged the order of the Ld. CIT(A) for allowing exemption u/s 10A despite the assessee not claiming it in the return filed. The Ld. CIT (A) justified the allowance by referring to CBDT Notification No.169, stating that no additional documents were required to be filed if the return was filed electronically. Citing relevant case laws, the Ld. CIT (A) held that even if the deduction u/s 10A was not claimed initially, filing Form No.56F later could suffice. Consequently, the deduction u/s 10A was allowed. Issue 2: Disallowance of claim of deduction u/s 10A due to lack of audit report The Assessing Officer disallowed the claim of deduction u/s 10A as the assessee failed to furnish the audit report in Form 56F along with the income tax return. However, the Ld. CIT (A) allowed the deduction u/s 10A after considering the Form 56F filed by the assessee, stating that the assessee was eligible for the deduction and had made due compliance by submitting the required documentation. Issue 3: Requirement of producing evidence during assessment proceedings The Revenue contended that the assessee had to produce all evidence relied upon for the income declared during assessment proceedings. However, the Ld. CIT (A) found no fault in the assessee's failure to file Form No.56F initially, given the electronic filing of the return. The Ld. CIT (A) allowed the deduction u/s 10A after considering the relevant case laws and documentation submitted later. Issue 4: Appeal against the order of the Ld. CIT (A) The Revenue appealed against the Ld. CIT (A)'s order, claiming it to be erroneous in law and on facts. However, the ITAT affirmed the Ld. CIT (A)'s decision to allow the deduction u/s 10A based on the compliance with Form No.56F, dismissing the grounds raised by the Revenue. Issue 5: Dispute regarding setting off of carried forward losses The Assessing Officer disallowed part of the carried forward losses to be set off in the current year, leading to an addition to the assessee's income. The ITAT noted that the assessee was eligible for deduction u/s 10A and had complied with the necessary requirements by filing Form No.56F and relevant audit reports. Consequently, the ITAT upheld the Ld. CIT (A)'s decision to allow the deduction u/s 10A, resulting in the assessed income being reduced to nil. In conclusion, the ITAT dismissed the Revenue's appeal, affirming the Ld. CIT (A)'s decision to allow the deduction u/s 10A for the assessee based on the compliance with Form No.56F and relevant case laws, ultimately resulting in a nil assessed income for the relevant year.
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