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TMI Blog2025 (2) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 13 in Form 10CCB is provided? (ii) Whether the Tribunal misdirected itself on facts and in law in adverting to the provisions of sub-sections (8) and (10) of Section 80IA of the Act, which was not the subject matter of the appeal filed by the respondents/revenue?" 2. The principal issue of contestation appears to be with respect to a purported failure on the part of the appellant to have complied with the stipulations prescribed by Rule 18BBB of the Income Tax Rules, 1961 [Rules]. More particularly, the respondents appear to have asserted that there was an evident failure on the part of the appellant to place on the record an agreement or approval that may have been granted to it by either a local or state authority. That prescription appears in Form 10CCB of the Income Tax Act, 1961 [Act]. In order to appreciate the stand which was taken by the respondents, we deem it apposite to extract Rule 18BBB and which reads as follows:- "18BBB. Form of Audit Report for Claiming Deduction under Section 80-I or Section 80IA or Section 80I-B or Section 80-IC (1) The report of the audit of the accounts of an assessee, which is required to be furnished under sub-section (7) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he undertaking or enterprise : ---------------------------- 9. Initial assessment year from when deduction is being claimed : ---------------------------- 10. Address (with District and State) of the enterprise/ undertaking claiming deduction : ---------------------------- 11. Excise/service tax registration number and office where registered : ---------------------------- 12. Sales-tax registration number and office where registered : ---------------------------- 13. Local/State authorities from whom approval is taken (attach copy of approval) : ---------------------------- ELIGIBLE BUSINESS UNDER SECTION 80-IA 14. Development, operation, maintenance of an infrastructure facility: (a) With respect to the infrastructure facility, does the enterprise (please tick): □Develop □ Operate and maintain, □ Develop, operate and maintain, the infrastructure facility. (b) Please specify the nature of the infrastructure facility*** [e.g., road, bridge, rail system, port, etc. [Explanation to section 80-IA(4)(i)]] : ---------------------------- (c) Has the operation and maintenance of the infrastructure facility been received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of article or thing or operation of cold storage plant: (a) Does the industrial undertaking manufacture or produce any article or thing specified in the Eleventh Schedule □ Yes □ No (Please specify the article or thing......) : ---------------------------- (b) If yes, does the manufacturing process use Power □ Yes □ No (c) Number of workers employed in the manufacturing process : ---------------------------- (d) Does the industrial undertaking operate any cold storage plant □ Yes □ No (e) Please specify if the company is a small scale industrial undertaking □ Yes □ No (f) If the industry is located in the North Eastern Region, is the industry a notified industry as per second proviso to section 80-IB(4)? □ Yes □ No (g) If the industry is located in Jammu & Kashmir, does it manufacture or produce any article or thing specified in part 'C' of the Thirteenth Schedule? □ Yes □ No 19. Business of ship (a) Is the ship owned by an Indian company and wholly used for the business carried on by it □ Yes □ No &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specify the method of accounting adopted : ---------------------------- 24. Other business activities (a) Is the undertaking in the business of setting up and operating a cold chain facility for agricultural produce □ Yes □ No (b) Is the undertaking in the integrated business of handling, storage and transportation of foodgrains □ Yes □ No (c) Is the undertaking in the business of processing, preservation and packaging of fruits or vegetables □ Yes □ No Eligible business under section 80-IC 25. (i) Whether the undertaking or enterprise is located in an area notified by the Board for the purposes of section 80-IC □ Yes □ No (ii) If yes, please indicate,- (a) Name of the Export Processing Zone/Integrated Infrastructure Development Centre/Industrial Growth Centre/Industrial Park/Estate/Software Technology Park/Industrial Area/Theme Park and the District/State in which located : ---------------------------- (b) Khasra No. of the undertaking or enterprise (Also indicate the Board's Notification No.) : ---------------------------- (c) If the eligible busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------- (c) ------------- -------Rs. ------------------- (d) ------------- -------Rs. ------------------- 29. Profits and gains derived by the Undertaking/enterprise from the Eligible business# 30. Deduction under section 80-I/80-IA/80-IB/80-IC (Strike out whichever is not applicable). : ---------------------------- Declaration *I/We have examined the balance sheet of the above industrial undertaking or enterprise styled** _________________ and belonging to the assessee M/s ______________ (Permanent Account Number or Aadhaar Number ________________) as at _______________and the profit and loss account of the said industrial undertaking or enterprise for the year ended on that date which are in agreement with the books of account maintained at the head office at _________________ and branches at *I/We have obtained all the information and explanations which to the best of *my/our knowledge and belief were necessary for the purposes of the audit, in *my/our opinion, proper books of account have been kept by the head office and the branches of the industrial undertaking or enterprise aforesaid visited by *me/us so far as appears from *my/our examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prise which undertakes a business referred to in sub-section (4) thereof. Eligible businesses are set forth in Section 80IA (4) and are envisaged to be the development, operation and maintenance or development, operation and maintenance of any infrastructural facility. The Explanation to sub-section (4) then proceeds to stipulate activities which would fall within the ambit of an "infrastructural facility". The relevant part of Section 80IA is extracted hereinbelow:- "80-IA. Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. (4) This section applies to- (i) any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions, namely:- (a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) it has entered into an agreement with the Central Government or a State Government or a local authority or any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erates or maintains and operates an industrial park or special economic zone notified by the Central Government in accordance with the scheme framed and notified by that Government for the period beginning on the 1st day of April, 1997 and ending on the 31st day of March, 2006: Provided that in a case where an undertaking develops an industrial park on or after the 1st day of April, 1999 or a special economic zone on or after the 1st day of April, 2001 and transfers the operation and maintenance of such industrial park or such special economic zone, as the case may be, to another undertaking (hereafter in this section referred to as the transferee undertaking), the deduction under sub-section (1) shall be allowed to such transferee undertaking for the remaining period in the ten consecutive assessment years as if the operation and maintenance were not so transferred to the transferee undertaking : Provided further that in the case of any undertaking which develops, develops and operates or maintains and operates an industrial park, the provisions of this clause shall have effect as if for the figures, letters and words "31st day of March, 2006", the figures, letters and words " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are spoken of in the principal parts of Section 80IA. 8. We had an occasion to view Rule 18BBB in the preceding parts of this decision. As is manifest from a reading of its title, the aforenoted rule spells out the requirements with respect to an audit report which must accompany a claim for deduction that is claimed under either Section 80I, 80IA, 80IB or 80IC. Viewed in that context it is apparent that it is a provision which compendiously seeks to regulate and introduce prescriptions with respect to an audit report which must accompany a claim for deduction under those family of provisions. 9. The requirement of an audit report is also found in Section 80IA(7) and which postulates that a deduction from profits and gains would not be admissible unless the accounts of the undertaking for the previous year for which the deduction is claimed have been audited by an accountant. That prescription by virtue of Section 80IC(7) also applies to a unit which claims deduction under that provision. 10. Till here there is perhaps no dispute between the contesting parties before us and insofar as the prescription of an audit report per se is concerned. The solitary question which aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al but the assessee is required to fulfill the requirement of law in relevant assessment year. We may note that the Hon'ble Supreme Court in the case of Distribution (Baroda) Pvt. Ltd. Vs. Union of India 155 ITR 120 has held that to perpetuate an error is no heroism and to rectify it is compulsion of judicial conscience. The issue in dispute is accordingly restored to the file of the Learned Assessing Officer, who after verification of the compliance of Section 80-IC (7), shall decide the issue in dispute of deduction under section 80-IC of the Act in accordance with law." 12. It is on the basis of its conclusion that the stipulation of an agreement with the Central/State government or local authority would have to necessarily accompany Form 10CCB, that it has proceeded to remit the matter for examination of the Assessing Officer [AO]. 13. We find that it has while framing that direction for remit clearly lost sight of the principal distinction between Sections 80IA and 80IC. As we view Section 80IC it becomes apparent that there is clearly no requirement of an entity which claims coverage under Section 80IC (2) (b) (ii) to have in place an agreement with either the Central o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand report on this issue. The Ld. CIT (A), however, on the basis of the financial statements and discussion with the Authorized Representative of the assessee held that there was no other business which was carried out by the assessee company and, therefore, there was no reason to go into the issue of deriving more than ordinary profit which might be expected to arise in the eligible business. The learned CIT (A) did not call for report or comment from the Assessing Officer on the specific submission of Authorized Representative. In our opinion, for application of section 80-IA(8) and 80-IA(10), the Ld. CIT (A) was required to examine all the expenses incurred by the assessee for ascertaining shifting of any expenses to any other business of the assessee or to any other concern. From the finding of the Ld. CIT (A), it cannot be ascertained that he has examined the expenses as per the requirement of the section 80IA (8) or 80IA (10) of the Act. The Ld. CIT (A) is having coterminous power* of the Assessing Officer, and thus, he was required to examine this issue thoroughly. In view of the facts of the circumstances of the case and in the interest of the substantial justice, we feel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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