1998 (1) TMI 95 - AT - Income Tax

Summary

Issues:
1. Correct order of allowing deductions under sections 80HHA, 80HHC, and 80-I in relation to deduction under section 32AB.
2. Compliance with the requirement of filing signed audit report for deductions under sections 32AB and 80HHC.

Analysis:

Issue 1: Correct order of allowing deductions under sections 80HHA, 80HHC, and 80-I in relation to deduction under section 32AB:

The case involved the question of the correct order of allowing deductions under sections 80HHA, 80HHC, and 80-I concerning the deduction under section 32AB. Initially, the Assessing Officer (AO) made a prima facie adjustment under section 143(1)(a) by allowing deductions under sections 80HHA and 80-I after deducting the amount allowable under section 32AB. The assessee contended that deductions under sections 80HHA and 80-I should be allowed before deducting the amount under section 32AB. The AO and the Commissioner of Income Tax (Appeals) (CIT(A)) relied on section 29 and section 80AB to dismiss the assessee's claim. However, the Income Tax Appellate Tribunal (ITAT) held that deductions under sections 80HHA and 80-I should be allowed before the deduction under section 32AB. The ITAT referred to various judicial decisions to support its conclusion, including judgments from the Orissa High Court and Karnataka High Court. The ITAT directed the AO to allow deductions under sections 80HHA and 80-I before the deduction under section 32AB, thereby allowing the assessee's appeal.

Issue 2: Compliance with the requirement of filing signed audit report for deductions under sections 32AB and 80HHC:

The second issue revolved around the compliance with the requirement of filing a signed audit report for claiming deductions under sections 32AB and 80HHC. The Assessing Officer rejected the claim of the assessee due to the audit report filed without being signed or dated. The CIT(A) allowed the deductions under sections 80HHC and 32AB based on the argument that the intimation under section 143(1)(a) was not an assessment order, and revised returns could be filed even after such intimation. The ITAT concurred with the CIT(A) and dismissed the Revenue's appeal. The ITAT cited various decisions from different High Courts to support the view that the filing of an audit report along with the return of income is not mandatory. The ITAT highlighted that the jurisdictional High Court had a different stance from the Punjab & Haryana High Court on this matter. Consequently, the ITAT upheld the CIT(A)'s decision and dismissed the Revenue's appeal.

In conclusion, the ITAT allowed the assessee's appeal and dismissed the Revenue's appeal, emphasizing the correct order of allowing deductions under sections 80HHA, 80HHC, and 80-I and the compliance aspect of filing a signed audit report for claiming deductions under sections 32AB and 80HHC.