1985 (1) TMI 93 - AT - Income Tax

Summary

Issues:
1. Deduction under sections 80HH and 80J denied due to non-submission of auditors' report.
2. Interpretation of rules 18B and 18C of the Income-tax Rules, 1962.
3. Compliance with conditions for claiming deductions under sections 80HH and 80J.
4. Applicability of precedents in similar cases.
5. Dismissal of the appeal by the Appellate Tribunal ITAT BOMBAY-C.

Detailed Analysis:
1. The appeal pertains to the denial of a deduction under sections 80HH and 80J of the Income-tax Act, 1961, due to the non-submission of the auditors' report in the prescribed forms under rules 18B and 18C of the Income-tax Rules, 1962. The Income Tax Officer (ITO) and the Appellate Assistant Commissioner (AAC) both upheld the denial, leading to the appeal before the Appellate Tribunal ITAT BOMBAY-C.

2. The assessee argued that the failure to submit the auditors' report was a technical default as the accounts were duly audited, and the report could have been furnished subsequently. The counsel referred to precedents where such reports were accepted even if submitted after the return filing but before the assessment completion. However, the departmental representative emphasized the mandatory nature of submitting the report along with the return, highlighting that it was not an idle formality but a necessary condition for claiming deductions.

3. The Tribunal noted that the auditors' report was not filed before the completion of the assessment or even before the AAC, unlike the cases cited by the assessee's counsel. Drawing parallels to a Supreme Court decision, the Tribunal emphasized that the prescribed conditions for deductions under sections 80HH and 80J, including the submission of auditors' reports, were not mere formalities but essential requirements. Therefore, the failure to comply with these conditions justified the revenue authorities' decision to not entertain the deduction claims.

4. The Tribunal rejected the argument that the auditors' report could have been submitted later in the assessment proceedings, as the rules clearly required its submission along with the return. Citing the precedent, the Tribunal affirmed that the failure to meet the prescribed conditions for deductions precluded the assessee from claiming the concessions under sections 80HH and 80J. The Tribunal concluded that the appeal filed by the assessee was without merit and dismissed it accordingly.

5. The Appellate Tribunal ITAT BOMBAY-C, consisting of Members A. V. Balasubramanyam and I. S. Nigam, delivered the order dismissing the appeal against the denial of deductions under sections 80HH and 80J due to the non-submission of the auditors' report as required by rules 18B and 18C of the Income-tax Rules, 1962.