2008 (12) TMI 13 - HC - Income Tax

Statutory audit report under Section 10A(5) is directory, filing before assessment framing preserves tax benefit under Sections 80IA/80HHB

HC held that the statutory requirement to file an audit report under Section 10A(5) (identical to Sections 80IA(7) and 80HHB(3)(ia)) is directory, not ... Interpretation of Section 10A (5) which is virtually identical to Section 80IA (7) as also 80HHB (3) (ia) - identical to the erstwhile provisions of Section 80J(6A) - The contention of the revenue was that unless and until the audit report is filed along with the return, the benefit of Section 10A cannot be available to the assessee. HELD THAT:- This Court has already interpreted the latter provisions and has held the same to be directory and not mandatory. Recently, we have considered the identical provisions of Section 80IA(7) in the case of Contimeters Electricals Private Limited [2008 (12) TMI 4 - HIGH COURT DELHI], held that as long as the audit report is filed before the framing of the assessment, the provisions of Section 80IA (7) would be complied with inasmuch as the same are directory and not mandatory. A similar view would have to be taken in the present case also inasmuch as the provisions are the same. No substantial question of law arises for our consideration. Appeal is dismissed. Issues: Whether the requirement in Section 10B(5) of the Income-tax Act, 1961 for filing an audit report is mandatory so as to deny deduction if the audit report is not filed with the return, or whether the requirement is directory and satisfied if the audit report is filed before framing of assessment.Analysis: The provision in question is materially identical to provisions in Sections 80IA(7), 80HHB(3)(ia) and the erstwhile Section 80J(6A). Prior authoritative interpretation of these identical provisions establishes that the statutory obligation to furnish an audit report does not operate as a condition precedent that must be fulfilled at the time of filing the return; instead, compliance with the requirement before the completion of assessment suffices. Applying that established legal framework to the present provision, the filing of the audit report prior to the framing of assessment meets the statutory requirement and remedies any initial omission at the time of return filing.Conclusion: The requirement under Section 10B(5) is directory and is satisfied if the audit report is filed before framing of assessment; accordingly, the appeal is dismissed and no substantial question of law arises against the tribunal's conclusion.