2024 (12) TMI 818 - AT - Income Tax

Disallowance of the deduction u/s 10AA - delay in filing Form 56F - HELD THAT - Form 56F, filed on 22.11.2017, serves as a crucial certification by an independent Chartered Accountant, attesting to the correctness of the claim made u/s 10AA. The form was submitted well before the issuance of the intimation u/s 143(1) of the Act on 24.09.2018. This establishes that the necessary certification was available on record at the time of processing. DR's contention for remand lacks merit as no further verification is required. The legislative intent behind Section 10AA of the Act is to promote exports and economic activity in SEZs, and procedural delays should not defeat substantive claims, particularly when the required documentation is on record before the completion of assessment. We hold that the disallowance of the deduction u/s 10AA is not justified, as the delay in filing Form 56F is a procedural lapse that does not go to the root of the claim. The deduction is restored without any necessity for remand. Accordingly, the ground of appeal of the assessee is allowed.

Summary

Issues:
Disallowance of deduction claimed under Section 10AA of the Income Tax Act for AY 2017-18 due to failure to file Form 56F along with the return of income.

Analysis:
The appellant, an individual engaged in IT-enabled services in an SEZ, claimed a deduction under Section 10AA of the Income Tax Act for AY 2017-18. The Centralized Processing Center disallowed the claim for not filing Form 56F along with the return of income, leading to a demand of Rs. 5,32,110. Rectification petitions were dismissed, and the CIT(A) upheld the disallowance, emphasizing the mandatory nature of filing Form 56F for claiming the deduction.

The appellant contended that the filing of Form 56F was procedural and highlighted that it was submitted before the issuance of the intimation under Section 143(1) of the Act. Judicial precedents were cited to support the argument that procedural delays should not override substantive compliance, especially when documents are submitted before assessment completion. The Departmental Representative argued for strict compliance with Section 10A(5) and the need for verification by the AO.

The Tribunal considered the precedents cited and the legislative intent behind Section 10AA to promote SEZ activities. It noted that Form 56F, filed before the intimation under Section 143(1), certified the claim's correctness. The Tribunal held that the delay in filing the form was procedural and did not invalidate the claim, restoring the deduction without remand. The decision emphasized that procedural delays should not hinder substantive claims under Section 10AA, aligning with the legislative intent to boost SEZ activities.

In conclusion, the Tribunal allowed the appeal, overturning the disallowance of the deduction under Section 10AA for AY 2017-18. The decision was pronounced in an open court at Ahmedabad on 13th December 2024.