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TMI Blog2008 (4) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... The following common question of law has been raised in the present appeals: " Whether on the facts and circumstances of the case, the learned Income Tax Appellate Tribunal was justified in holding that even if the company did not fulfil the condition of sub section (5) of Section 32 AB, it is entitled for deduction under section 32 AB." Brief facts of the case are that the assessee (hereinafter referred to as "the Respondent-assessee") is U.P. Government undertaking engaged in the construction of buildings etc for U.P. Government, other Government or Semi Government organisation. For the assessment year, 1987-88, return was filed on 25.02.1988. Subsequently, revised return was filed on 19.07.1989. Original assessment order under section 143 (3) of the Act was passed on 3.11.1989. The said assessment order was set aside by the Commissioner of Income Tax (Appeal). In pursuance of the appellate order, fresh assessment order was made on 24.12.1991. The assessing authority made a disallowance of Rs.21, 70,097/- under section 32 AB of the Act because the assessee failed to fulfil the condition of sub section (5) of Section 32 AB of the Act i.e. could not furnish the auditor's r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 32 AB of the Act, namely, auditor's report could not be furnished along with the return. We have considered the submission of the learned Senior Standing Counsel and have gone through the orders of the authorities below. Section 32 AB (1) and (5) reads as follows: "32AB. (1) Subject to the other provisions of this section, where an assessee, whose total income includes income chargeable to tax under the head "Profit and gains of business or profession", has, out of such income,_ (a)deposited any amount in an account (hereafter in this section referred to as deposit account) maintained by him with the Development Bank before the expiry of six months from the end of the previous year or before furnishing the return of his income, whichever is earlier; or (b)utilised any amount during the previous year for the purchase of any new ship, new aircraft, new machinery or plant, without depositing any amount in the deposit account under clause (a), in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) to be framed by the Central Government, or if the assessee is carrying on the business of growing and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Punjab and Haryana High Court held as follows: "We may now analyse sub-sections (1) and (5) of Section 32 AB of the Act in order to determine whether the requirement of furnishing the report of the audit in the prescribed form along with the returns of income embodied in sub-section (5) is mandatory and non-compliance therewith has the effect of depriving the assessee of his right to get the benefit of deductions under sub-section (1). Section 32AB falls in Chapter IV of the Act which contains provisions relating to computation of total income. This Chapter is divided into Parts A to F. Part D contains section 28 to 44D relating to profits and gains of business or profession. Sections 32A to 44D of the Act speak of various deductions. Clause (a) of sub-section (1) of section 32AB lays down that where an assessee whose total income includes income chargeable to tax under the head "Profits and gains of business or profession" has, out of such income, deposited any amount in an account maintained by him with the Development Bank before the expiry of six months from the end of the [previous year or before furnishing the return of his income, whichever is earlier, in accordance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctions. However, this is not true of sub-section (5), which only provides for filing of the report of audit prepared by the accountant as defined in the Explanation below sub-section (2) of Section 288 along with the return of income. The assessee' claim for deduction under clause (a) of sub-section (1) of Section 32 AB does not depend on the submission of the audit report along with the return of income, but on deposit of the amount in the account maintained by him with the Development Bank before the expiry of six months from the end of the previous year or before furnishing the return of his income, whichever is earlier. In this context, it is important to bear in mind that Section 139 of the Act, which provides for filing of return in the prescribed form within the stipulated time also provides for filing of revised return and rectification of defect in the return. Therefore, the requirement of filing the duly audited report along with the return cannot be treated as mandatory and the assessee cannot be deprived of the benefit of deduction if the same is filed before the finalisation of the assessment. In other words, the Assessing Officer can, for the purpose of allowing dedu ..... 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