2014 (7) TMI 252 - AT - Income Tax

Deduction u/s 80IB of the Act Correct audit report as per Form 10CCB filed subsequent to original assessment Held that - The assessee s claim for deduction u/s 80IB on the profits derived from its industrial undertaking has been allowed to the assessee since last several years - In all the subsequent proceedings, like revision proceedings u/s 263 and the appeal before the Tribunal against the order, this vital fact has either not been brought to the notice of any of the authorities or had not been considered the contention is accepted that if the audit report for the purpose of claiming deduction u/s 80IB, has been filed subsequently before the AO or even at the appellate stage, it should be taken into cognizance for examining the allowability of claim for deduction - neither the AO nor the Commissioner (Appeals) in the proceedings, has taken cognizance of the audit report filed before the AO in the rectification proceedings, thus, the matter is liable to be remitted back to the AO for the examination that if the revised audit report has been filed before the AO in pursuance of notice u/s 154, then it should be taken into cognizance for examining the allowability of the claim u/s 80IB Decided partly in favour of Assessee.

Summary

Issues:
Challenge to impugned order under section 143(3) r/w section 263 r/w section 254 for assessment year 2004-05.
Disallowed deduction under section 80IB of Rs. 24,16,480 due to incorrect audit report.
Validity of revised audit report filed subsequent to original assessment proceedings.

Analysis:
The appellant contested the impugned order dated 15th October 2010, challenging the disallowance of deduction under section 80IB amounting to Rs. 24,16,480. The dispute arose as the audit report filed by the assessee was not in the prescribed form and lacked crucial details required for allowing the claim. The Assessing Officer initially allowed the deduction based on the old format audit report but later issued a notice under section 154 to rectify the mistake. In response, the assessee submitted a revised audit report in the new format, which was accepted by the Assessing Officer. However, the Commissioner under section 263 directed the re-computation of total income without allowing the deduction under section 80IB, leading to an appeal before the Tribunal.

In the subsequent proceedings, the Assessing Officer disallowed the claim under section 80IB based on the Commissioner's directions, emphasizing that the deduction cannot be allowed to the assessee. The appellant argued that the revised audit report should be considered for allowing the claim, citing that the filing of the audit report is directory, not mandatory. The appellant relied on several case laws to support this argument. The Departmental Representative, however, supported the Commissioner's order, which was confirmed by the Tribunal, emphasizing the absence of the requisite audit report before the Assessing Officer.

The Tribunal observed that the assessee's claim for deduction under section 80IB had been allowed in previous years as well. Despite the initial discrepancy in the audit report, the revised report was submitted in the new format after the rectification notice, which the Assessing Officer accepted without altering the deduction. The Tribunal noted that this crucial fact was not considered in the subsequent proceedings. Therefore, in the interest of justice, the matter was remanded back to the Assessing Officer to examine the revised audit report's allowability for the deduction under section 80IB. The Tribunal partially allowed the grounds raised by the assessee for statistical purposes, restoring the matter for further examination by the Assessing Officer.

In conclusion, the appellant's appeal was partly allowed for statistical purposes, emphasizing the importance of considering the revised audit report for determining the allowability of the deduction under section 80IB.