2023 (2) TMI 516 - AT - Income Tax

Tax Tribunal upholds deduction under section 80IC for Assessment Year 2017-18

The Tribunal dismissed the Revenue's appeal against the Commissioner of Income Tax (Appeals)-4, New Delhi's decision to allow deduction u/s 80IC for ... Deduction u/s 80IC - Claim denied as assessee had not filed Form 10CCB along with return of income - Whether audited report in Form 10CCB is mandatory to the filed along with return of income as per the provision of section 80IA(7) which is pre-condition of claiming the deduction - CIT-A allowed deduction - HELD THAT:- CIT(A) while deciding the issue in favour of the assessee has given the finding that though there was delay in upholding Form 10CCB but the same was uploaded before the return of income was processed u/s 143(1) - For allowing the ground of assessee, CIT(A) had relied on the decision of Contimeters Electricals (P.) Ltd. [2008 (12) TMI 4 - HIGH COURT DELHI] and other decisions. We find that Hon’ble Apex Court in the case of CIT vs. G. M. Knitting Industries (P.) Ltd. [2015 (11) TMI 397 - SC ORDER] has held even though Form 10CCB was not filed along with the return of income but when the same was filed before the final order of assessment was made, assessee was entitled to claim deduction. Before us, Revenue has not pointed to any contrary binding decision in its support nor has pointed to any fallacy in the findings of CIT(A). We, therefore, find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the requirement to furnish the auditor's report in Form 10CCB is a mandatory pre-condition that must be complied with at the time of filing the return of income for claiming deduction under section 80IC. 2. Whether filing/uploading Form 10CCB after filing the return of income but before the completion of assessment (including prior to the passing of final assessment order) entitles the assessee to claim deduction under section 80IC. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Mandatory pre-condition of filing Form 10CCB with return (Legal framework) Legal framework: Section 80IC (as read with the relevant procedural provision referred to by the parties, i.e., the requirement for auditor's report in Form 10CCB under the statute/regulation governing claims for deduction) conditions the allowance of the deduction on compliance with prescribed documentary requirements. Precedent treatment: Decisions of higher courts have considered whether the statutory/formal requirement of filing Form 10CCB must be strictly complied with at the time of filing the return or whether subsequent filing before assessment suffices. In the present judgment the Tribunal expressly relied on the Apex Court decision which holds that filing Form 10CCB before the final assessment order cures non-filing with the return. Interpretation and reasoning: The Tribunal examined the AO's disallowance predicated solely on the fact that Form 10CCB was not uploaded with the return dated 24.10.2017. The Court analysed the temporal sequence - return filed 24.10.2017; Form 10CCB uploaded 10.11.2017; assessment processed under section 143(1) on 30.10.2018 - and compared it with judicial pronouncements on the effect of subsequent filing of Form 10CCB prior to completion of assessment. The Tribunal accepted the view that the substantive entitlement to deduction is not forfeited by a delay in filing the Form if it is filed before the conclusion of the assessment proceedings, and that the requirement is procedural rather than jurisdictional when complied with before the final assessment order. Ratio vs. Obiter: The Tribunal treated the Apex Court holding as ratio deciding that delayed filing of Form 10CCB (so long as filed before final assessment order) does not vitiate the claim; this principle was applied as binding on the issue. Conclusion: The Tribunal concluded that failure to file Form 10CCB with the original return was not a fatal non-compliance where the Form was uploaded prior to the final assessment order; therefore the filing requirement is not an absolute pre-condition at the return filing instant if compliance occurs before assessment is finalized. Issue 2 - Effect of filing Form 10CCB after return but before final assessment (Legal framework) Legal framework: The operative question is whether submission/upload of Form 10CCB after filing the return, but prior to the assessment being finalized or the passing of the assessment order, satisfies the statutory/administrative requirement for claiming deduction under section 80IC. Precedent treatment: The Tribunal relied on controlling precedent (Apex Court) which held that where Form 10CCB was not furnished with the return but was filed before the final order of assessment, the assessee is entitled to the deduction. The Tribunal also noted decisions of the High Court that supported the same view. Interpretation and reasoning: Applying the cited authorities, the Tribunal accepted the reasoning that the object of requiring Form 10CCB is to enable the revenue to verify eligibility; filing the Form before the assessment is completed furnishes the requisite verification material in time for the assessing officer to consider the claim. The Tribunal found no binding contrary authority presented by the Revenue and no error in the appellate authority's factual finding that the Form was uploaded before processing of the return under section 143(1) and certainly before the final assessment order. Ratio vs. Obiter: The holding that post-return but pre-assessment filing of Form 10CCB validates the claim for deduction was applied as the operative ratio in disposing of the Revenue's challenge. Conclusion: The Tribunal concluded that uploading/formal submission of Form 10CCB on 10.11.2017 (after filing the return on 24.10.2017 but prior to the final assessment order) cured the initial non-filing; consequently the deduction under section 80IC could not be denied on that ground and the appellate authority's allowance of the deduction was upheld. Cross-References and Outcome Cross-reference: The Tribunal expressly relied on and followed the binding principle laid down by the Apex Court (as applied by the appellate authority and supported by High Court authorities) that submission of Form 10CCB before the final assessment order satisfies the filing requirement for claiming deduction under section 80IC; no contrary binding precedent was presented by the Revenue. Final conclusion: The Tribunal dismissed the Revenue's ground challenging the allowance of deduction under section 80IC on the ground of delayed filing of Form 10CCB and affirmed the order of the Commissioner (Appeals) allowing the deduction.