2016 (4) TMI 645 - AT - Income Tax

Disallowance of deduction u/s 80IB(10) - audit report required u/s 44AB - Held that - In section 80IB(13) of the Act it has been provided that the provisions of section 80IA(5) and 80IA (7) to (12) shall apply to the eligible business mentioned in section 80IB(10) of the Act. Now further going through the section 80IA(7) of the Act we find that the deduction for profits and gains arrived from such eligible business shall not be admissible unless the account of the undertaking for the previous year relevant to assessment year for which the deduction is claimed have been audited by Accountant as defined in the Explanation below subsec.( 2) of section 388 of the Act and the assessee furnishes along with his return of income, the report of such audit in the prescribed form and duly signed and verified by such Accountant. The relevant prescribed form is form no.10CCB which is provided in Rule 18BBB of IT Rules which has been reproduced above. From going through the records carefully we find that report in form no.10CCB which was mandatorily required has not been furnished along with the return of income and this is further supported by the report of auditors in form no.3CD relating to audit report required u/s 44AB wherein the auditor has made a remark that as advised to us by assessee claim u/s 80IB(10) is available and we have been disclosing the same as a reply to point 26 of the form 3CD. The assessee has requested us to continue with the same disclosure till to the date of finalization & disposal of appeal of the Income-tax Department with ITAT, Ahmedabad. Therefore we have continued to show that claim is admissible, but the same should be viewed in the light of above. As assessee has defaulted in submitting the auditor s report mandatorily required to be furnished along with the return of income we are of the view that assessee cannot claim deduction u/s 80IB(10) of the Act and, therefore, we find no reason to interfere with the order of ld. CIT(A). - Decided against assessee.

Summary

Issues:
1. Disallowance of deduction u/s 80IB(10) of the Income Tax Act, 1961.
2. Non-filing of audit report in Form No. 10CCB for claiming deduction u/s 80IB(10).
3. Compliance with statutory conditions for claiming deduction.

Issue 1: Disallowance of deduction u/s 80IB(10):
The appeal was against the disallowance of a deduction under section 80IB(10) of the Income Tax Act. The assessee, engaged in project consultancy, claimed the deduction for the assessment year 2008-09. The Assessing Officer denied the deduction citing reasons related to previous disallowances and non-filing of the required audit report in Form No. 10CCB. The CIT(A) upheld the disallowance, stating that the mandatory audit report was not submitted, rendering the assessee ineligible for the deduction.

Issue 2: Non-filing of audit report in Form No. 10CCB:
The primary contention was the failure to submit the audit report in Form No. 10CCB along with the return of income, as required by Rule 18BBB of the IT Rules. The auditor's report in Form No. 3CD indicated the claim's admissibility based on the assessee's advice, not the auditor's own conviction. The absence of the mandatory Form No. 10CCB raised doubts about the eligibility for the deduction u/s 80IB(10). The Tribunal emphasized the importance of complying with statutory requirements for claiming deductions under the Act.

Issue 3: Compliance with statutory conditions:
The Tribunal highlighted the significance of adhering to statutory conditions for claiming deductions, specifically the necessity of filing the audit report in Form No. 10CCB as per the provisions of the Act. Despite the appellant's arguments regarding past approvals and opportunities to furnish the report, the failure to submit the mandatory document led to the dismissal of the appeal. The Tribunal concluded that the appellant's non-compliance with the statutory provisions barred them from availing the deduction u/s 80IB(10), affirming the CIT(A)'s decision.

In conclusion, the Tribunal dismissed the appeal, emphasizing the critical importance of fulfilling statutory requirements, particularly the submission of the mandatory audit report in Form No. 10CCB for claiming deductions under section 80IB(10) of the Income Tax Act. The judgment underscored the necessity of strict compliance with legal provisions to avail tax benefits and upheld the disallowance of the deduction due to the failure to meet these requirements.