2016 (2) TMI 434 - HC - Income Tax

Valid compliance for claiming of deduction u/s.10A - Whether the report in Form No. 56F not filed with return and also not during the course of assessment proceedings can be said be valid compliance for claiming of deduction u/s.10A? - Held that - The statutory language contained in subsection ( 5) of section 10A of the Act with subsection (4) of section 80HHC of the Act which also insists on the assessee furnishing the report of the accountant for claim of deduction under section 80HHC of the Act. The Tribunal referred to the decisions of this Court, particularly in case of Zenith Processing Mills v. CIT reported in 1995 (9) TMI 37 - GUJARAT High Court to come to the conclusion that when the assessee had eventually filed such returns, though at the appellate stage, the same must be seen as sufficient compliance. In our opinion, the Tribunal committed no error. As noted, the Revenue does not have any grievance or objection regarding the validity of the claim of assessee, except that the procedural requirement of filing of audition report in the prescribed format was not done. Undisputedly facts are that audit report was furnished even along with the return of the income, but in form No.3CB and 3CD and not in the prescribed format. This error was corrected before the appellate authority. No question of law arises. - Decided against revenue

Summary

Issues:
- Validity of compliance for claiming deduction under section 10A of the Income Tax Act.
- Requirement of filing audit report in Form No.56F for deduction under section 10A.

Analysis:
1. The main issue in this case revolves around the validity of compliance for claiming a deduction under section 10A of the Income Tax Act. The appellant, the Revenue, challenged the judgment of the Income Tax Appellate Tribunal, questioning whether the report in Form No. 56F, not filed with the return or during the assessment proceedings, could be considered valid compliance for claiming the deduction under section 10A. The Assessing Officer disallowed the deduction claimed by the assessee as the audit report in Form No.56F, required under section 10A, was not filed, even though the audit return in Form No.3CB and 3CD was submitted as per section 44AB of the Act. However, the CIT(Appeals) and the Tribunal ruled in favor of the assessee, emphasizing the importance of statutory compliance and the submission of the accountant's report for deduction claims. The Tribunal's decision was supported by previous court rulings, including the case of Zenith Processing Mills v. CIT. The Tribunal's conclusion was that the filing of the audit report, albeit at the appellate stage, constituted sufficient compliance with the procedural requirements.

2. The Tribunal's decision was further justified by the fact that the Revenue did not dispute the validity of the assessee's claim, except for the procedural lapse of not filing the audit report in the prescribed format. It was acknowledged that the audit report was indeed submitted along with the income tax return, albeit in Form No.3CB and 3CD instead of Form No.56F. The error in the format of the audit report was rectified before the appellate authority, demonstrating the assessee's intent to comply with the statutory requirements. Consequently, the High Court found no legal issue to be addressed, as the essential compliance was met, and the Revenue's objection was solely based on the technicality of the report format.

3. The counsel for the Revenue attempted to rely on a previous Division Bench decision in the case of Panasonic Energy India Co. Ltd v. Assistant Commissioner of Income Tax, where the Court refused to entertain a similar request for submitting a report in the prescribed format for a claim under a different section of the Act. However, the High Court distinguished the present case from the precedent cited by the Revenue, emphasizing the substantial differences in the factual context. Ultimately, the High Court dismissed the tax appeal, upholding the Tribunal's decision in favor of the assessee regarding the deduction claim under section 10A of the Income Tax Act.