2024 (10) TMI 531 - AT - Income Tax

Disallowance of deduction u/s 80IA(4) - assessee has failed to file Form no. 10CCB within the due date - HELD THAT - Admittedly in the present case, the audit report in Form no. 10CCB was filed on 17/10/2022, i.e. prior to the due date for furnishing the return of income under sub-section (1) of section 139 and before the filing of return of income by the assessee on 04/11/2022. The amendment by the Finance Act, 2020 has reduced the timeline for filing the audit report in Form no. 10CCB only with an intention to enable the pre-filing of returns in case of persons having income from business or profession. The fact that the assessee filed the audit report in Form no. 10CCB on 17/10/2022, even though delayed by 10 days, however the same was filed before the filing of the return of income by the assessee, and thus in our considered view, the same is in conformity with the intention of the aforesaid amendment. Therefore, we are of the considered view that the decision of the Hon ble Supreme Court in Wipro Ltd 2022 (7) TMI 560 - SUPREME COURT also does not support the case of the Revenue. Thus, the amendment by the Finance Act, 2020 has only modified the due date for filing the audit report in Form no. 10CCB without any other significant change, considering which it cannot be said that the requirement is now mandatory in nature. Apart from the aforesaid delay in filing the Form no. 10CCB, there is no other allegation by the Revenue to deny the deduction claimed under section 80-IA(4)(iv) of the Act for the year under consideration, which is the 9th year of the claim of deduction by the assessee. Therefore Addl./Joint CIT(A) erred in upholding the disallowance of deduction claimed u/s 80-IA(4)(iv) - AO is directed to allow the deduction claimed by the assessee under section 80-IA(4)(iv) - Assessee appeal allowed.

Summary

Issues Involved:

1. Denial of deduction under section 80-IA(4) of the Income Tax Act due to late filing of Form no. 10CCB.
2. Interpretation of the amendment introduced by the Finance Act, 2020 regarding the timeline for filing audit reports.

Issue-wise Detailed Analysis:

1. Denial of Deduction under Section 80-IA(4):

The primary issue in this appeal was the denial of a deduction claimed by the assessee under section 80-IA(4)(iv) of the Income Tax Act. The Centralised Processing Centre, Bengaluru, disallowed the deduction on the grounds that the assessee failed to file Form no. 10CCB by the specified due date, which was a prerequisite for claiming the deduction. The assessee argued that the delay was due to a technical error and inadvertence, as the audit report in Form no. 3CA-3CD was filed on time and indicated eligibility for the deduction. The appellate authority upheld the disallowance, leading to the present appeal.

The Tribunal examined whether the requirement to file Form no. 10CCB by the due date is mandatory or directory. It was noted that the audit report was filed before the due date for filing the return of income under section 139(1), which was extended to 07/11/2022. The Tribunal found that the intention behind the amendment by the Finance Act, 2020, was to enable pre-filling of returns rather than impose a mandatory requirement. The Tribunal concluded that the timeline for filing the audit report is directory, not mandatory, and thus the deduction should not have been denied solely on the basis of a 10-day delay in filing Form no. 10CCB.

2. Interpretation of the Amendment by the Finance Act, 2020:

The Tribunal analyzed the amendment introduced by the Finance Act, 2020, which required the audit report to be furnished at least one month prior to the due date for filing the return of income. The rationale behind this amendment, as explained in the Memorandum of the Finance Bill, 2020, was to reduce compliance burdens and facilitate pre-filing of returns. The Tribunal noted that prior to this amendment, the audit report could be filed along with the return of income. It was determined that the amendment did not intend to make the timeline for filing the audit report a mandatory requirement for claiming deductions.

The Tribunal referred to various judicial precedents, including decisions by the Karnataka High Court and coordinate benches of the Tribunal, which consistently held that the requirement to file the audit report along with the return is directory. The Tribunal emphasized that the amendment's purpose was administrative convenience rather than creating a substantive condition for deductions.

Conclusion:

Based on the analysis, the Tribunal set aside the disallowance of the deduction claimed under section 80-IA(4)(iv) of the Act. It directed the Assessing Officer to allow the deduction, as the delay in filing Form no. 10CCB was not a valid ground for denial. The appeal by the assessee was allowed, reinforcing that the timeline for filing the audit report is directory and not a mandatory condition for claiming deductions under section 80-IA.