2025 (1) TMI 1111 - AT - Income Tax

Denial of deduction u/s 10A - defective Form 56F - there is no certification by Chartered Accountant as required under law - CIT(A) allowed deduction - HELD THAT - We find the Tribunal in the case of Mahendra Kumar Damani 2023 (2) TMI 386 - ITAT CHENNAI held that the provisions of sub-section (5) of section 10A of the Act shall apply in relation to deduction specified in section 10AA of the Act. Whether report signed as Deloitte Haskins and Sells is not a valid verification of report in Form 56F and treated as defective? - We find the Act envisages an Accountant as referred in sub-section (5) to section 10A of the Act and the definition of which as provided in Explanation below to sub-section (2) of section 288 of the Act should sign Form 56F which was not done in this case as observed by the AO. We find in order to certify the correct claim under the provisions of section 10A of the Act an Accountant as referred in sub-section (5) to section 10A of the Act and the definition of which as provided in Explanation below to sub-section (2) of section 288 of the Act is required. It is amply clear that a Chartered Accountant falling under the definition to clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act 1949 is required to certify the correct claim under the provisions of section 10A of the Act. Assessee could not provide any material supporting the order of the ld. CIT(A) showing that Deloitte Haskins and Sells is an Accountant as referred in sub-section 5 of section 10A of the Act. Thus we hold the view of the AO is correct in holding the Form 56F is defective and the assessee is not entitled for deduction under section 10A - Decided against assessee.

1. ISSUES PRESENTED and CONSIDERED

The core legal issue considered in this judgment is whether the Commissioner of Income Tax (Appeals) [CIT(A)] was justified in allowing a deduction under section 10A of the Income Tax Act, 1961, despite the presence of a defective Form 56F, which is required to be filed with the return of income.

2. ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents:

Section 10A of the Income Tax Act provides a deduction for newly established undertakings in Free Trade Zones, etc. Sub-section (5) of section 10A mandates that the deduction is not admissible unless the assessee furnishes the report of an accountant in the prescribed form (Form 56F) along with the return of income. The definition of an "Accountant" is provided in Explanation below sub-section (2) of section 288 of the Act, which refers to a "Chartered Accountant" as defined in the Chartered Accountants Act, 1949.

Court's interpretation and reasoning:

The Tribunal examined whether the Form 56F submitted by the assessee was valid despite being unsigned by a Chartered Accountant. The CIT(A) had previously held that the form was valid because it was signed by "Deloitte Haskins and Sells," a multinational Chartered Accountant firm. However, the Tribunal found no evidence to confirm that "Deloitte Haskins and Sells" met the definition of an "Accountant" under the Act.

Key evidence and findings:

The Tribunal noted that the original Form 56F lacked necessary details, such as the date of initial registration, and was unsigned by a Chartered Accountant. A subsequent addendum provided these details but was still unsigned by a Chartered Accountant, leading the Assessing Officer to deem the form defective.

Application of law to facts:

The Tribunal applied the legal requirement that the report must be signed by an "Accountant" as defined by the Act. Since the form was not signed by a Chartered Accountant, the Tribunal concluded that the form was defective and the deduction under section 10A could not be allowed.

Treatment of competing arguments:

The Revenue argued that the CIT(A) erred in allowing the deduction based on a technicality. The Tribunal agreed, emphasizing the mandatory nature of the requirement for the form to be signed by a Chartered Accountant. The Tribunal referenced the Supreme Court decision in PCIT v. Wipro Ltd., which underscored the necessity of compliance with statutory requirements.

Conclusions:

The Tribunal concluded that the CIT(A)'s decision to allow the deduction was not justified, as the Form 56F was defective. Consequently, the Tribunal set aside the CIT(A)'s order and restored the Assessing Officer's decision to deny the deduction.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning:

"We find the Act envisages an 'Accountant,' as referred in sub-section (5) to section 10A of the Act and the definition of which as provided in Explanation below to sub-section (2) of section 288 of the Act, should sign Form 56F, which was not done in this case as observed by the Assessing Officer."

Core principles established:

The judgment reinforces the principle that statutory requirements, such as the certification of Form 56F by a Chartered Accountant, are mandatory for claiming deductions under section 10A. Non-compliance with these requirements results in the denial of the deduction.

Final determinations on each issue:

The Tribunal determined that the Form 56F submitted by the assessee was defective due to the lack of a Chartered Accountant's signature. As a result, the deduction under section 10A was not admissible, and the Revenue's appeal was allowed.

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