2008 (12) TMI 15 - HC - Income Tax

s.10A(5) audit report filing directory not mandatory; tax deduction preserved if report filed before assessment framing

HC held that the statutory requirement to file an audit report under s.10A(5) (mirroring s.80IA(7)/80HHB(3)(ia)) is directory, not mandatory; the tax ... 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 Section 10A(5) of the Income-tax Act, 1961 requires the audit report to be mandatorily filed along with the return for entitlement to deduction, or whether the requirement is directory so that filing the audit report before framing of assessment satisfies the provision.Analysis: Section 10A(5) is materially identical to provisions such as Section 80IA(7), Section 80HHB(3)(ia) and the erstwhile Section 80J(6A). Prior authoritative interpretation of these identical provisions has treated the filing requirement for the audit report as directory rather than mandatory. Under that interpretation, compliance is achieved if the audit report is furnished before the assessment is framed, thereby entitling the assessee to the statutory deduction despite non-filing with the return at the initial stage.Conclusion: Section 10A(5) is directory; filing the audit report before framing of the assessment satisfies the proviso and the assessee is entitled to the deduction. The result is in favour of the assessee.