2018 (7) TMI 2040 - HC - Income Tax

High Court upholds deletion of disallowance under Income Tax Act Section 80IA, stresses procedural compliance

PRINCIPAL COMMISSIONER INCOME-TAX, SURAT-2 Versus M/s VARDHMAN FASHIONS PVT LTD

The High Court dismissed the Revenue's appeal challenging the deletion of disallowance under Section 80IA of the Income Tax Act. The Court upheld the ... Disallowance u/s. 80IA - assessee could not furnish audit report in prescribed form 10CCB - HELD THAT:- The issue involved in the present Appeal is now not res integra in view of the recent decision of the Division Bench of this Court in the case of Pr. Commissioner of Income Tax, Surat 1 vs. Kiran Industries P. Ltd. ( 1760533 ) as repeatedly taken a view that filing of audited accounts in the prescribed format is a procedural requirement and as long as during the assessment the same has been complied with, the deduction cannot be disallowed. Several other High Courts have taken a similar view. - Decided against the Revenue. Issues:1. Disallowance of deduction under Section 80IA(4)(iv) of the Income Tax Act.2. Requirement of filing audit report in prescribed form 10CCB.3. Interpretation of relevant case laws pertaining to sections 80J and 80IA.Analysis:1. The Revenue challenged the ITAT's decision upholding the deletion of disallowance of Rs. 68,10,188 under Section 80IA of the Act by the CIT(A). The main contention was the non-furnishing of audit report in Form 10CCB by the assessee. The Assessing Officer disallowed the deduction claimed under Section 80IA(4)(iv) due to the absence of the audit report. However, it was later revealed that the assessee did file Form No.10CCB during the assessment proceedings. The CIT (Appeals) held that the disallowance was unjustified, leading to the deletion of the disallowance by the Assessing Officer. The Revenue's appeal was dismissed by the ITAT.2. The issue of filing the audit report in Form 10CCB was crucial in this case. The Revenue argued that the assessee failed to electronically file the audit report before the due date, as required by Rule 12(2) of the Income Tax Rules, 1962. However, it was established that the assessee did submit the mandatory Form No.10CCB during the assessment proceedings, thereby fulfilling the procedural requirement for claiming the deduction under Section 80IA(4)(iv) of the Act.3. The ITAT's reliance on past High Court judgments related to sections 80J and 80IA was questioned by the Revenue. The Revenue contended that the ITAT incorrectly applied judgments from 1992 and 1995 concerning section 80J, whereas the case at hand pertained to section 80IA effective from 01.04.2000. However, the High Court, citing a recent decision in a similar case, emphasized that the filing of audited accounts in the prescribed format is a procedural requirement. As long as this requirement is met during the assessment, the deduction cannot be disallowed. The Court highlighted that various High Courts have adopted a similar stance on this matter, indicating a consistent judicial interpretation across jurisdictions.In conclusion, the High Court dismissed the Revenue's appeal, stating that since the issue was no longer res integra and was decided against the Revenue in a recent case, no substantial question of law arose in the present appeal. The Court upheld the principle that compliance with procedural requirements during assessment is crucial for claiming deductions under the Income Tax Act, reinforcing the importance of fulfilling such formalities within the stipulated timelines.