2024 (8) TMI 1506 - AT - Income Tax

Denial of deduction u/s. 80IA - assessee belatedly filed/uploaded the Audit Report in Form No. 10CCB electronically on 30.03.2019 (i.e. but before the return of income was processed) - HELD THAT - As assessee had e-filed the audit report in Form 10CCB on 30.03.2019 and processing by CPC u/s. 143(1) of the Act took place only on 12.01.2020, which is an event much after the assessee had e-filed the Form 10CCB, therefore, the claim of deduction ought to have been granted especially when assessee was granted such a deduction for the earlier 5 years. Therefore, we set-aside the impugned order of Ld.CIT(A)/JCIT(A) and direct the AO to allow the claim of deduction u/s. 80IA. Assessee appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

• Whether the filing of the Audit Report in Form No. 10CCB is mandatory for claiming a deduction under Section 80IA of the Income Tax Act, 1961, at the time of filing the return of income.
• Whether the deduction claimed under Section 80IA should be allowed if the Audit Report is filed before the assessment is completed.
• The applicability of precedents and the principle of hierarchy in judicial decisions regarding the filing of the Audit Report.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Mandatory Nature of Filing Audit Report in Form No. 10CCB

• Relevant Legal Framework and Precedents: The requirement under Section 80IA of the Income Tax Act involves filing an Audit Report in Form No. 10CCB. The court considered precedents, including decisions by various High Courts and the Supreme Court, which have held that the filing of the Audit Report is directory rather than mandatory if done before the assessment is completed.
• Court's Interpretation and Reasoning: The court interpreted that the requirement to file the Audit Report is not mandatory at the time of filing the return but is sufficient if filed before the assessment proceedings are concluded.
• Key Evidence and Findings: The assessee filed the Audit Report before the CPC processed the return, and the court noted that the assessee had been allowed the deduction in previous years under similar circumstances.
• Application of Law to Facts: The court applied the principle that the filing of the Audit Report before the completion of assessment satisfies the requirement under Section 80IA, thus entitling the assessee to the deduction.
• Treatment of Competing Arguments: The court considered the argument by the Revenue that the Audit Report must be filed with the return but found the judicial precedents supporting the assessee's position more compelling.
• Conclusions: The court concluded that the deduction under Section 80IA should be allowed as the Audit Report was filed before the assessment was completed.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "If assessee had filed the Form 10CCB before the assessment proceedings culminate, then the deduction claimed u/s. 80IB ought not to be denied on the reason that assessee did not file Form 10CCB along with Return of Income (RoI)."
• Core Principles Established: The court reaffirmed the principle that procedural requirements, such as filing an Audit Report, are directory if compliance is achieved before the completion of assessment proceedings.
• Final Determinations on Each Issue: The court set aside the order of the CIT(A) and directed the Assessing Officer to allow the deduction claimed under Section 80IA, emphasizing the precedence of judicial decisions supporting the directory nature of filing the Audit Report.

The judgment underscores the importance of adhering to judicial precedents and clarifies the procedural requirements for claiming deductions under the Income Tax Act. It highlights the distinction between exemption provisions and deduction provisions, emphasizing the directory nature of filing requirements when the assessment is not yet concluded.