2014 (2) TMI 128 - HC - Income Tax

Entitlement for deduction u/s 10A certificate required u/s.10A(5) of the Act having not been filed along with the return assessee produced the Form No.56F at the appellate stage - Held that - The decision in Commissioner of Income-Tax And Another -vs- Ace Multitaxes Systems Pvt.Ltd. 2009 (1) TMI 260 - KARNATAKA HIGH COURT followed - sub-section (7) of Section 80-IA of the Act does not cast any obligation on the assessee that the return must be accompanied by the audit report - For meeting the practical difficulties of the assessee, it is not necessary that in all cases, it must be accompanied by the audit report thus, the order of the Tribunal, declining to interfere with the order of the Appellate Authority is valid Decided in favour of Assessee.

Summary

Issues:
- Appeal against Tribunal's decision granting deduction under Section 10-A of the Income Tax Act without the accountant's report filed along with the return of income.
- Legality of extending benefit under Section 10-A by the first Appellate Authority after the production of Form No.56-F at the appellate stage.
- Validity of Tribunal's decision in denying Revenue's appeal and upholding the Appellate Authority's decision.

Analysis:
1. Issue 1 - Appeal against Tribunal's decision on deduction under Section 10-A:
The appeals were filed by the Revenue against the Tribunal's orders granting the assessee deduction under Section 10-A of the Income Tax Act despite the accountant's report not being filed along with the return of income. The Tribunal held that the Appellate Authority did not commit any illegality in extending the benefit under Section 10-A to the assessee. The Tribunal refused to entertain the Revenue's appeal, leading to the filing of the present appeals.

2. Issue 2 - Legality of extending benefit under Section 10-A by the first Appellate Authority:
The assessee, a Software development Company, claimed deduction under Section 10-A of the Act but was initially denied the relief as Form No.56-F was not submitted with the return of income. However, the Form was produced at the appellate stage, and the first Appellate Authority accepted it after giving the assessee an opportunity. The Tribunal found no fault in the Appellate Authority's decision to grant the benefit under Section 10-A, leading to the Revenue's appeal.

3. Issue 3 - Validity of Tribunal's decision in denying Revenue's appeal:
The Tribunal's decision not to interfere with the Appellate Authority's order granting the benefit under Section 10-A was upheld by the High Court. The Court referred to a previous case where it was held that the return need not always be accompanied by the audit report, similar to the situation under Section 10-A(5) of the Act. The Court emphasized that the Appellate Authorities have the discretion to consider relevant documents produced during the assessing process, even if not submitted before the Assessing Authority.

In conclusion, the High Court dismissed both appeals, answering the substantial questions of law in favor of the assessee and against the Revenue. The Court affirmed the Appellate Authority's decision to grant the benefit under Section 10-A based on the production of Form No.56-F during the appellate stage, highlighting the importance of considering relevant documents during the assessing process.