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2022 (9) TMI 340 - AT - Income TaxDeduction u/s. 80-IA - Claim denied as return of income was not accompanied by the mandatory audit report as prescribed in Form No.10CCB - HELD THAT - Admittedly the assessee has filed return of income claiming deduction u/s. 80IA of the Act on 31.10.2017, but audit report in Form No.10CCB for claiming deduction u/s. 80-IA was filed on 13.11.2017 and the evidence of the same was placed on record. The processing of return u/s. 143(1) was done by the A.O, CPC, Bengaluru and issued intimation dated 23.03.2019, which is much after the filing of audit report. Once, this is a fact, this issue is clearly covered by the decision of AKS Alloys (P.) Ltd. 2011 (12) TMI 39 - MADRAS HIGH COURT and which was affirmed by the Hon ble Supreme Court in the case of CIT v. G.M. Knitting Industries (P.) Ltd. 2015 (11) TMI 397 - SC ORDER . We have also gone through the case law of Hon ble Supreme Court in the case of PCIT v. M/s. Wipro Ltd 2022 (7) TMI 560 - SUPREME COURT wherein the Hon ble Supreme Court has categorically made distinction between the exemption clauses and deduction clauses of the Act. Thus we are of the view that once the assessee has filed an audit report in Form No.10 CCB on 13.11.2017 and processing of return u/s. 143(1) of the Act was done by the A.O, CPC, Bengaluru on 23.03.2019, which is an event much after, the assessee is fully entitled to claim deduction u/s. 80-IA of the Act. We hold so. Accordingly, the orders of the lower authorities are set aside and claim of deduction u/s. 80-IA of the Act of the assessee is allowed. Thus, the appeal of the assessee is allowed.
Issues involved:
The only issue in this appeal is regarding the disallowance of the claim of deduction under section 80-IA of the Income Tax Act amounting to Rs. 35,58,840, made by the Deputy Commissioner of Income Tax, Centralized Processing Center, Bengaluru, while adjudicating the return of income under section 143(1) of the Act and without jurisdiction. Analysis: Issue 1: Disallowance of deduction under section 80-IA The appellant, engaged in the business of manufacturing and exporting hosiery garments, filed its return of income for the Assessment Year 2017-18 on 31.10.2017. The claim of deduction under section 80-IA amounting to Rs. 35,58,840 was disallowed by the Deputy Commissioner of Income Tax, Centralized Processing Center, Bengaluru, in an intimation dated 23.03.2019, as the mandatory audit report in Form No.10CCB was not filed along with the return of income. The Commissioner of Income Tax (Appeals) upheld this disallowance, citing the absence of the audit report at the time of claiming the deduction. The CIT(A) relied on the judgment of the Hon'ble Rajasthan High Court in CIT vs. Jyoti Jain (2009) 17 DTR (Raj) 286 to support the decision. However, the appellant argued that the audit report was filed later, on 13.11.2017, albeit after the return filing date. The appellant cited the decision of the Hon'ble Supreme Court in CIT v. G.M. Knitting Industries (P.) Ltd. [2015] 376 ITR 456 (SC) to support their claim that filing the necessary certificate before the final assessment entitles them to the deduction. The appellant also referred to the decision of the Hon'ble Madras High Court in CIT v. AKS Alloys (P.) Ltd. [2012] 18 taxmann.com 25 (Mad.) which allowed the deduction even if the audit report was filed before the assessment was completed. Issue 2: Interpretation of the law regarding filing of audit reports The appellant argued that the filing of the audit report in Form No.10CCB is not mandatory at the time of filing the return of income but can be done before the assessment is completed. They cited various judicial precedents, including decisions by the Karnataka High Court, Delhi High Court, Bombay High Court, and others, to support their stance that filing the audit report before the assessment is finalized fulfills the statutory requirements. The appellant's counsel emphasized that the law does not mandate filing the audit report along with the return of income, as it is a directory requirement and not mandatory. The appellant's reliance on these precedents highlighted the consistent view across various High Courts that the audit report can be filed before the assessment without affecting the eligibility for deductions. Conclusion: The Appellate Tribunal, after considering the arguments and precedents cited by both parties, held that the appellant, having filed the audit report in Form No.10CCB on 13.11.2017 before the completion of the assessment on 23.03.2019, was entitled to claim the deduction under section 80-IA of the Act. The Tribunal set aside the orders of the lower authorities and allowed the appellant's claim for deduction. The decision was based on the distinction between exemption provisions and deduction clauses of the Act, as clarified by the Hon'ble Supreme Court in the case of PCIT v. M/s. Wipro Ltd., highlighting that the claim for deduction under section 80-IA was justified in this case.
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