2017 (9) TMI 2036 - AT - Income Tax

Assessee gets Section 80IC deduction despite 18-day delay in filing return after CBDT condones delay

ITAT Delhi allowed the assessee's appeal regarding Section 80IC deduction despite an 18-day delay in filing the return. The tribunal held that the Central ... Filing of audit report with return is directory and not mandatory - claim of deduction under section 80IC is subject to production of the audit certificate - appeal/tribunal proceedings are a continuation of assessment proceedings - condonation of delay by the CBDT renders the belated return eligible for statutory benefitsFiling of audit report with return is directory and not mandatory - claim of deduction under section 80IC is subject to production of the audit certificate - appeal/tribunal proceedings are a continuation of assessment proceedings - Form No. 10CCB filed after completion of assessment could be admitted for consideration of the claim under section 80IC and the matter remitted to the Assessing Officer for fresh adjudication. - HELD THAT: - The Tribunal followed precedent holding that while the production of the audit certificate is a condition precedent for entitlement to the deduction, the requirement that it be filed along with the return is procedural and directory. Relying on authorities which treated filing of the audit report with the return as directory and recognising that appellate proceedings are a continuation of assessment, the Tribunal held that submission of Form No.10CCB at the stage of appeal/tribunal (after assessment) is not fatal and the Assessing Officer should be directed to consider the audit report and decide the claim on merits. Consequently the issue was set aside to the Assessing Officer to examine the claim afresh in the light of the subsequently furnished Form No.10CCB dated 25/09/2012. [Paras 6, 7]Form No.10CCB dated 25/09/2012 is to be considered; the assessment is set aside and the Assessing Officer directed to re-examine the claim for deduction under section 80IC on merits.Condonation of delay by the CBDT renders the belated return eligible for statutory benefits - The CBDT's order dated 29/03/2017 condoning the 18-day delay in filing the return made the assessee eligible to seek deduction under section 80IC. - HELD THAT: - The Tribunal recorded that the Central Board of Direct Taxes had condoned the delay in filing the return of income by order dated 29/03/2017. In view of that condonation, the return is to be treated as filed within the statutory scheme for the purpose of claiming the deduction, subject to the production and consideration of the requisite audit certificate. [Paras 6]With CBDT condonation in place, the assessee is eligible to have the claim for deduction under section 80IC considered (subject to production of the audit report).Final Conclusion: The assessee's appeal is allowed; the Tribunal set aside the assessment on this issue and directed the Assessing Officer to consider the Form No.10CCB filed on 25/09/2012 and adjudicate the claim for deduction under section 80IC on merits, having noted that the CBDT has condoned the delay in filing the return. Issues Involved:1. Delay in filing the return of income and its impact on claiming deduction under section 80IC of the Income Tax Act.2. Submission of audit report in Form No. 10 CCB after the completion of assessment and its procedural implications.3. The role of the Central Board of Direct Taxes (CBDT) in condoning the delay in filing the return.4. Interpretation of mandatory versus directory provisions regarding the filing of audit reports.Detailed Analysis:1. Delay in Filing the Return of Income:The primary issue in this case was the delay in filing the return of income by the assessee, which was filed 18 days late. This delay initially led to the denial of the deduction claimed under section 80IC of the Income Tax Act, amounting to Rs. 5,024,393. The assessee's return was filed beyond the time limit specified under section 139(1), leading to an assessment under section 144, which determined a higher total income. The assessee's appeal was based on the contention that the delay had been condoned by the CBDT as per their order dated 29/03/2017, thus making the return eligible for consideration under the law for granting the deduction.2. Submission of Audit Report in Form No. 10 CCB:The key procedural issue was the submission of the audit report in Form No. 10 CCB after the assessment was completed. The assessee argued that the submission of this form is a procedural requirement and that the appeal process is a continuation of the assessment proceedings. Therefore, the audit report submitted before the tribunal should be considered for the claim. The department contended that without the audit report being submitted before the assessing officer, no deduction could be allowed.3. Role of CBDT in Condoning Delay:The CBDT's role was crucial as it had the authority to condone the delay in filing the return. The assessee's petition for condonation was pending during the CIT(A)'s decision, but it was later condoned by the CBDT. This condonation was pivotal as it allowed the return to be treated as filed within the stipulated time, thereby enabling the consideration of the deduction claim under section 80IC.4. Interpretation of Mandatory vs. Directory Provisions:The tribunal examined various judicial precedents regarding whether the requirement to file the audit report along with the return is mandatory or directory. Citing the decision of the Hon'ble Calcutta High Court in CIT Vs. Magnum Exports Private Limited, it was noted that while filing the audit report is mandatory for claiming deductions, the timing of its submission is procedural and thus directory. The tribunal emphasized that the assessment is not final until completed by the tribunal, allowing for procedural compliance at the appellate stage.Conclusion:The tribunal, following the precedent set by the Hon'ble Calcutta High Court, directed the assessing officer to consider the audit report submitted by the assessee for the deduction claim under section 80IC. The matter was remitted back to the assessing officer to examine the claim afresh, considering the audit report. Consequently, the appeal of the assessee was allowed, with directions for a fresh assessment. The judgment underscores the distinction between mandatory requirements for claiming deductions and procedural aspects of compliance, which can be addressed during the appellate process.