Audit report filing "along with" return for s. 80J deduction-late submission at appeal allowed; denial solely for non-filing rejected.

The dominant issue was whether furnishing the audit report "along with" the return under s. 80J(6A) is a mandatory precondition to deduction under s. 80J, when the report was produced only at the appellate stage. The HC held s. 80J(6A) is directory because the provision's object is satisfied if the audit report is available for verification before the claim is finally adjudicated, and appellate authorities possess coextensive powers with the assessing authority to admit and evaluate such material or direct its consideration. Consequently, denial of deduction solely for non-filing with the return was impermissible, and the assessee's eligibility for s. 80J relief was upheld against the revenue.

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Issues involved: Interpretation of u/s 80J(6A) of the Income-tax Act, 1961 regarding the requirement of furnishing audit report along with the return and its implications on eligibility for relief u/s 80J.

Summary:
The High Court of Madras addressed the interpretation of u/s 80J(6A) of the Income-tax Act, 1961 in a case where the Tribunal deemed the requirement of furnishing the audit report along with the return as directory, not mandatory. The Tribunal directed the Commissioner to consider the audit report filed by the assessee before him for deciding the claim under section 80J of the Act.

The Revenue contended that the order was untenable as the audit report was not enclosed with the return but filed after assessment before the appellate authority, citing a decision of the Punjab and Haryana High Court to argue that the section's requirement is mandatory.

The High Court dismissed the Revenue's contention, citing a precedent from the Gujarat High Court which emphasized that the relevant stage for considering the claim under section 80J is during the assessment process by the assessing authority. The court highlighted that the main purpose of section 80J is to provide incentives to new industries, and the construction of the provision should not frustrate this objective.

The court emphasized that the timing of filing the audit report, whether before assessment or before the appellate authority, does not affect the purpose of the section. The appellate authority was deemed to have the powers of the original authority and could direct the consideration of the audit report on its merits.

Ultimately, the court ruled in favor of the assessee, holding that the Tribunal was correct in interpreting u/s 80J(6A) as directory, and the assessee was eligible for relief under section 80J despite not filing the audit report along with the return of income as required.

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