2024 (5) TMI 1650 - AT - Income Tax

Windmill power business s.80-IA deduction claim despite late Form 10CCB filing, denial barred at s.143(1) processing

The dominant issue was whether a deduction under s.80-IA could be denied at the stage of processing under s.143(1) on the ground that the return/Form ... Deduction u/s.80IA - Claim denied as Form 10CCB is not filed within due date - assessee is engaged in the business of generation of power through windmill - HELD THAT:- Deduction u/s 80IA of the Act cannot be denied on the reason that assessee has not filed return of income within due date as mentioned u/s 139(1) of the Act in the assessment year 2019-20 While processing return u/s 143(1) of the Act, the deduction u/s 80IA of the Act cannot be denied as this assessment not falls u/s 143(1) of the Act. For this purpose, we rely on the judgement of Aliudepur Seva & Others [2023 (2) TMI 1115 - ITAT RAJKOT] Denial of deduction u/s 80IA of the Act while processing the return of income u/s 143(1) of the Act is not justified. Accordingly, the grounds raised by the assessee are allowed. Issues: (i) Whether deduction under section 80IA can be denied by processing u/s 143(1) on the ground that Form 10CCB/audit report was not filed with the return within the original due date; (ii) Whether filing of the audit report in Form 10CCB is mandatory to claim deduction under section 80IA or merely directory for AY 2019-20.Issue (i): Whether denial of deduction under section 80IA while processing the return under section 143(1) is permissible for AY 2019-20.Analysis: The issue concerns scope of adjustments permissible under section 143(1) for AY 2019-20 and applicability of amendments introduced later. The assessment year in question predates the Finance Act, 2021 amendment that enables disallowance of Chapter VI-A deductions by summary adjustment for late filing. Coordinate-bench decisions considered the Explanation to section 143(1) and held that denial of Chapter VI-A deductions on grounds of late filing of return did not fall within prima facie adjustments available under section 143(1) for the year under consideration.Conclusion: Denial of deduction under section 80IA by processing u/s 143(1) is not justified for AY 2019-20 and the deduction cannot be disallowed by such summary processing.Issue (ii): Whether the requirement to furnish audit report in Form 10CCB along with the return is mandatory or directory for claiming deduction under section 80IA for AY 2019-20.Analysis: Relevant statutory text (section 80IA(7) and Explanation 2 to section 139(1)) and CBDT extension orders were considered. Judicial precedents from various High Courts and Tribunals were applied, which uniformly interpret filing of the audit report along with the return as directory; substantial compliance is satisfied if the audit report is filed before framing of assessment. For AY 2019-20, CBDT had extended the due date to 31.10.2019 for assessees requiring audit under Explanation 2 to section 139(1), and the return and Form 10CCB were filed on 05.10.2019.Conclusion: Filing of the audit report in Form 10CCB along with the return is directory and not mandatory; the assessee satisfied the requirement for AY 2019-20 and is entitled to the deduction under section 80IA.Final Conclusion: The assessee's grounds challenging denial of deduction under section 80IA and related interest/late fee are allowed; the deduction is to be permitted and consequential interest/fees reversed as applicable.Ratio Decidendi: For AY 2019-20, denial of Chapter VI-A deduction by adjustments under section 143(1) is not permissible and the requirement to file the audit report in Form 10CCB with the return under section 80IA(7) is directory so long as the report is furnished before completion of assessment; CBDT's extension of due date under Explanation 2 to section 139(1) governs the applicable due date.