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 benefit is available if the audit report is furnished before framing of assessment. Applying precedent, the Court found no substantial question of law and dismissed the revenue's appeal seeking denial of the deduction for late filing of the audit report.

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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.

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