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2022 (7) TMI 1287 - AT - Income TaxDeduction u/s 80IB - observation of the AO that as the assessee firm had failed to obtain and place on record a certificate from a competent authority that it is a SSI, therefore, for the said reason it was not entitled for deduction u/s 80IB - whether or not the CIT(Appeals) is justified in concluding that as the filing of an audit report in Form 10CCB is procedural and directory in nature, therefore, pursuant to filing of the same by the assessee i.e, both in the course of the reassessment proceedings and also in the course of the proceedings before him, no adverse inference qua its entitlement for deduction u/s 80IB was liable to be drawn? - whether the failure on the part of the assessee to file a certificate from the competent authority evidencing that it was registered as a SSI would divest its entitlement towards deduction u/s 80IB? - HELD THAT - As is discernible from Clause (g) of sub-section (14) of Sec. 80IB, the same only contemplates the definition of a SSI i.e an industrial undertaking which as on the last day of the previous year is regarded as a small-scale industrial undertaking under Sec. 11B of the Industries (Development and Regulation) Act, 1951 (65 of 1951). As such, what is required is that the stipulations for being regarded as a SSI under the Industries (Development and Regulation) Act, 1951 are required to be complied with and there is no obligation cast upon the assessee to file any certificate from the competent authority that it is registered as a SSI. Involving identical facts, we find that the assessee s claim for deduction u/s 80IB was, inter alia, dislodged by the CIT vide his order passed under Sec. 263 of the Act for AY 2009-10. However, on appeal, the Tribunal had vide its order passed 2018 (3) TMI 1937 - ITAT RAIPUR vacated the adverse inferences drawn by the CIT on the aforesaid count and, had observed, that the registration of the assessee as a SSI was not a precondition for availing deduction u/s 80IB of the Act. Be that as it may, we find that the assessee had vide its letter dated 25.01.2017 filed before the CIT(Appeals) a copy of its registration certificate as a SSI. No adverse inferences qua the entitlement of the assessee for deduction u/s 80IB could have been drawn, for the reason that the assessee had in the course of the assessment proceedings failed to place on record its certificate of registration as a SSI. We, thus, not finding any infirmity in the view taken by the CIT(Appeals) who had held the assessee s claim for deduction u/s 80IB of the Act as being in order, uphold his order.
Issues Involved:
1. Deletion of addition on account of disallowance of deduction under section 80IB. 2. Reliance on the decision of the jurisdictional ITAT. 3. Verification of the basic finding regarding the status of the assessee as a Small Scale Industry (SSI). 4. Verification of eligibility criteria for deduction under section 80IB. 5. Applicability of the Supreme Court decision in DCIT vs. Ace Multi Axes Systems Ltd. 6. CIT(A)'s powers under section 250(4) of the Income Tax Act. 7. Obligation of CIT(A) and ITAT to conduct proper inquiry. 8. Acceptance of fresh evidence without allowing the AO to examine it. 9. Justification of the CIT(A)'s decision in favor of the assessee. 10. Verification of the assessee's status as an SSI and its location in an industrially backward state. 11. Overall legality and factual correctness of the ITAT's order. Detailed Analysis: 1. Deletion of Addition on Account of Disallowance of Deduction under Section 80IB: The department challenged the CIT(A)'s decision to delete the addition of Rs. 15,20,513/- made by the AO on account of disallowance of deduction under section 80IB. The CIT(A) held that the filing of the audit report in Form No. 10CCB, which is procedural and directory in nature, was validly done during the reassessment and appellate proceedings. Thus, no adverse inference was warranted. 2. Reliance on the Decision of the Jurisdictional ITAT: The CIT(A) relied on the jurisdictional ITAT's decision in the assessee's own case for AY 2009-10, where similar facts were involved, to allow the deduction under section 80IB. The ITAT supported this reliance, noting that the procedural requirement of filing the audit report could be fulfilled during appellate proceedings. 3. Verification of the Basic Finding Regarding the Status of the Assessee as a Small Scale Industry (SSI): The AO had disallowed the deduction under section 80IB on the grounds that the assessee did not provide a certificate from the competent authority confirming its status as an SSI. The CIT(A) and ITAT found that the definition of an SSI under section 80IB(14)(g) does not mandate the filing of such a certificate. Compliance with the stipulations under the Industries (Development and Regulation) Act, 1951 was deemed sufficient. 4. Verification of Eligibility Criteria for Deduction under Section 80IB: The ITAT concurred with the CIT(A) that the procedural requirement of filing the audit report in Form No. 10CCB was met during the reassessment and appellate proceedings. Therefore, the AO's adverse inference regarding the eligibility criteria was unwarranted. 5. Applicability of the Supreme Court Decision in DCIT vs. Ace Multi Axes Systems Ltd: The department cited the Supreme Court decision in DCIT vs. Ace Multi Axes Systems Ltd., arguing that the assessee was not entitled to the deduction if it lost its eligibility as an SSI in a particular assessment year. However, the ITAT found that the assessee had complied with the necessary conditions and upheld the CIT(A)'s decision. 6. CIT(A)'s Powers under Section 250(4) of the Income Tax Act: The department argued that the CIT(A) did not exercise its concurrent powers with the AO properly. The ITAT, however, found that the CIT(A) had appropriately considered the audit report and other evidence submitted during the appellate proceedings. 7. Obligation of CIT(A) and ITAT to Conduct Proper Inquiry: The department contended that the CIT(A) and ITAT failed to conduct a proper inquiry. The ITAT, however, noted that the necessary procedural requirements were met during the reassessment and appellate stages, and the CIT(A)'s decision was based on the available evidence. 8. Acceptance of Fresh Evidence without Allowing the AO to Examine It: The department claimed that the CIT(A) accepted fresh evidence without giving the AO an opportunity to examine it, violating Rule 46A of the I.T. Rules. The ITAT found that the audit report in Form No. 10CCB was already submitted during the reassessment proceedings, and thus, no fresh evidence was improperly admitted. 9. Justification of the CIT(A)'s Decision in Favor of the Assessee: The ITAT upheld the CIT(A)'s decision, finding that the procedural requirements for claiming the deduction under section 80IB were met, and the assessee's status as an SSI was adequately demonstrated. 10. Verification of the Assessee's Status as an SSI and Its Location in an Industrially Backward State: The ITAT found that the assessee's compliance with the definition of an SSI under section 80IB(14)(g) was sufficient, and there was no requirement to provide a certificate from a competent authority. The location in an industrially backward state was not a decisive factor in this case. 11. Overall Legality and Factual Correctness of the ITAT's Order: The ITAT concluded that the CIT(A)'s order was legally and factually correct, as the procedural requirements for the deduction under section 80IB were met, and the assessee's status as an SSI was adequately demonstrated. Conclusion: The ITAT dismissed the revenue's appeal and the assessee's cross-objection, upholding the CIT(A)'s decision to allow the deduction under section 80IB. The procedural and directory nature of filing the audit report and the compliance with the definition of an SSI were key factors in the judgment.
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