2017 (4) TMI 1609 - AT - Income Tax

Tribunal denies deduction under Sections 10A and 10B for failure to file mandatory forms.

The Tribunal set aside the CIT(A)'s decision and upheld the Assessing Officer's order, denying the deduction under Sections 10A and 10B due to the failure ... Wrong claim of deduction u/s.10A - AO found that the assessee was claiming deduction u/s.10B as against u/s.10A since assessment year 2004-05 and only in the impugned assessment year 2011-12, the assessee has claimed exemption u/s.10A - whether deduction u/s.10A or 10B can be allowed without filing the mandatory form 56F or 56G by the assessee alongwith return of income u/s.139(1) ? - HELD THAT:- The language of section 10A & 10B are para maeria and, therefore, the above quoted decision of Rajkot Tribunal Special Bench in the case of Saffire Garments [2012 (12) TMI 193 - ITAT RAJKOT] squarely applies to the facts of assessee’s case. It is not in dispute that the assessee since assessment year 2004-05 had been claiming deduction u./s. 10B of the Act. Further, the assessee is not a unit established under Special Economic Zone and, therefore, provisions of section 10A are not applicable. So far as deduction 10B is concerned, in view of above quoted decision of the Tribunal in the case of Saffire Garments(supra) the assessee is not entitled for deduction u/s.10B also as the mandatorily required audit report in Form 56G was not filed by the assessee alongwith the return of income u/s.139(1) of the Act. Therefore, we set aside the order of the CIT(A) and restore the order of the Assessing Officer and allow the ground of appeal of the revenue. Issues Involved:1. Whether the CIT(A) erred in deleting the addition of Rs. 3,67,15,136/- as a wrong claim of deduction under Section 10A of the Income Tax Act.2. Whether the deduction under Section 10A or 10B can be allowed without filing the mandatory forms 56F or 56G along with the return of income under Section 139(1).Issue-Wise Detailed Analysis:1. Deletion of Addition by CIT(A):The primary issue in this appeal is whether the CIT(A) was correct in deleting the addition of Rs. 3,67,15,136/- claimed as a deduction under Section 10A of the Income Tax Act. The assessee had filed its e-return for the assessment year 2011-12, showing an income of Rs. 14,80,454/- after claiming a deduction of Rs. 3,93,09,436/- under Section 10A. The Assessing Officer (AO) found discrepancies as the assessee had previously claimed deductions under Section 10B since the assessment year 2004-05 and switched to Section 10A in the impugned year. The AO disallowed the deduction under Section 10A on the grounds that the assessee's unit was not established under a Special Economic Zone and also did not allow the deduction under Section 10B due to the absence of the mandatory audit report in Form 56G.The CIT(A) allowed the assessee's claim, directing the AO to reconsider the exemption after evaluating the merits of its applicability under Sections 10A or 10B. The CIT(A) admitted Form 56F/Form 56G in the interest of justice, noting that the contents of both forms are largely similar.2. Mandatory Filing of Forms 56F or 56G:The second issue revolves around whether the deduction under Section 10A or 10B can be allowed without the mandatory filing of forms 56F or 56G along with the return of income under Section 139(1). The Tribunal referred to the Rajkot Special Bench decision in the case of Saffire Garments vs. Income-tax Officer, which held that the proviso to Section 10A(1A) is mandatory. It was noted that the assessee is required to file the return of income within the prescribed time under Section 139(1). Failure to do so results in various consequences, including the denial of deductions under Sections 10A and 10B.The Tribunal emphasized that the language of Sections 10A and 10B is para materia (similar in substance), making the Rajkot Tribunal Special Bench's decision in Saffire Garments applicable to the present case. Since the assessee had not filed the mandatory audit report in Form 56G along with the return of income under Section 139(1), the Tribunal concluded that the assessee is not entitled to the deduction under Section 10B either.Conclusion:The Tribunal set aside the order of the CIT(A) and restored the order of the Assessing Officer, thereby disallowing the deduction under Sections 10A and 10B due to the non-filing of the mandatory forms. The appeal filed by the revenue was allowed.Order Pronouncement:The order was pronounced in the open court on 26/04/2017 in the presence of the parties.