2022 (2) TMI 34 - AT - Income Tax

Tribunal allows appeals, directs deductions under section 80IA for assessment years 2010-11 and 2012-13.

The Tribunal allowed the appeals filed by the assessee, directing the Assessing Officer to allow the deductions claimed under section 80IA for the ... Reopening of assessment u/s 147 - disallowance of claim of the assessee u/s 80IA - HELD THAT:- The original assessment proceedings, Assessing Officer has not disputed the deduction under section 80IA of the Act,rather he disputed quantum of deduction. That is, assessing officer has nowhere stated that assessee is not eligible for deduction under section 80IA of the Act. The audit report may be filed at the time of making the assessment. We note that assessee company has claimed deduction under section 80IA for assessment year 2010-11 and for assessment year 2012-13, respectively. The audit report has been filed by the assessee during the course of assessment proceedings. The assessee`s books of accounts has been audited and subject to Tax Audit Report. The books of accounts have not been rejected by AO and assessee made compliance of provisions of section 80IA of the Act. The assessee had not considered the interest paid on loan taken for wind mill machinery; therefore deduction under section 80IA was rectified by assessee suo moto and hence claimed lower deduction under section 80IA of the Act. Based on this factual position, we allow both appeals of the assessee. The assessing officer is directed to allow deduction under section 80IA for assessment year 2010-11 and for assessment year 2012-13.Since, we have adjudicated both these appeals taking into account the peculiar facts of the assessee`s case, therefore it is made clear that instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year. - Decided in favour of assessee. Issues Involved:1. Legality of reopening the assessment under section 147 by issuing notice under section 148 of the Income Tax Act, 1961.2. Disallowance of the assessee's claim under section 80IA of the Income Tax Act, 1961.3. Non-direction by the CIT(A) to allow the claim made under section 80IA as per the return filed in response to the notice under section 148.Detailed Analysis:1. Legality of Reopening the Assessment under Section 147 by Issuing Notice under Section 148:The assessee, a private limited company, originally filed its return of income for the assessment year 2010-11 on 28-09-2010, declaring a total income of Rs. 61,60,302/-. The assessee claimed a deduction under section 80IA of Rs. 11,00,952/- which was allowed in the scrutiny assessment under section 143(3) dated 19.02.2013. However, the assessment was reopened on the grounds that the assessee had not filed Form 10CCB, making the deduction under section 80IA non-allowable. In response to the notice under section 148, the assessee filed a fresh return along with Form 10CCB, revising the deduction under section 80IA to Rs. 2,31,016/-. The Assessing Officer (AO) did not allow this revised deduction, citing the absence of Form 10CCB as prescribed under section 80IA(7) of the Act.2. Disallowance of the Assessee's Claim under Section 80IA:The AO's disallowance of the revised deduction under section 80IA was based on the non-filing of Form 10CCB. The assessee contended before the CIT(A) that the claim for deduction under section 80IA was genuine and argued that the AO is bound to allow the correct deduction even if the assessee initially claimed an incorrect deduction. However, the CIT(A) upheld the AO's decision. The assessee then appealed to the Tribunal, arguing that the deduction was rectified to account for interest paid on the loan for windmill machinery and that the intention was not to evade tax, as evidenced by the tax paid exceeding the tax payable.3. Non-Direction by the CIT(A) to Allow the Claim Made under Section 80IA as per the Return Filed in Response to the Notice under Section 148:The Tribunal noted that during the original assessment proceedings, the AO did not dispute the eligibility for the deduction under section 80IA but only the quantum of the deduction. The Tribunal highlighted that the audit report in Form 10CCB can be filed at the time of making the assessment and that the assessee's accounts were audited and subject to a Tax Audit Report. The Tribunal relied on the judgments of the Hon'ble Gujarat High Court in the cases of Zenith Processing Mills vs. CIT and CIT vs. Gujarat Oil and Allied Industries, which held that the requirement to furnish the auditor's report along with the return is directory and not mandatory, allowing the assessee to furnish the report at a later stage.Conclusion:The Tribunal concluded that the assessee had complied with the provisions of section 80IA, having filed the audit report during the assessment proceedings and rectified the deduction claim. The AO's disallowance was thus unjustified. The appeals for both assessment years 2010-11 and 2012-13 were allowed, directing the AO to allow the deductions claimed under section 80IA. The judgment was specific to the facts of the case and not to be treated as a precedent for other assessment years. Both appeals filed by the assessee were allowed, and the order was pronounced on 24/01/2022.