Section 80IA deduction and delayed audit report: timely return plus audit produced before assessment allows the deduction.

For assessment years before the later amendment, the requirement to furnish an audit report in support of a Chapter VI A deduction is a directory machinery provision; thus, where the return claiming the deduction was filed within the due date and the audit report was produced before completion of assessment, the deduction under Section 80IA is allowable. The Article rejects strict compliance principles applied to exemption provisions, distinguishing Chapter III cases, and treats the post filing production of the audit report as satisfying the statutory prerequisite for the assessment year in question.

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Issues: Whether belated filing of audit report in Form 10CCB disentitles the assessee from claim of deduction under Section 80IA of the Income-tax Act, 1961 where the return of income claiming the deduction was filed within the due date under Section 139(1).

Analysis: The Tribunal examined the interplay of Section 80A(5), Section 80AC and Section 80IA(7) of the Income-tax Act, 1961 as applicable to assessment year 2016-17. The return of income for AY 2016-17 was filed within the due date under Section 139(1) with the deduction claimed under Section 80IA. The requirement to furnish the audit report in Form 10CCB for claiming deduction under Section 80IA was introduced by amendment effective 01.04.2020 and therefore is not applicable to AY 2016-17. Consistent judicial authorities hold that furnishing the audit report in support of a Chapter VI-A deduction is a machinery provision that is directory and is satisfied if the report is filed before completion of assessment. The Tribunal distinguished decisions concerning exemption provisions under Chapter III (where strict compliance was held mandatory) and applied the settled position that Chapter VI-A deduction provisions operate in a different realm; accordingly, directory filing of the audit report before completion of assessment meets statutory requirement for AY 2016-17.

Conclusion: The deduction claimed under Section 80IA of the Income-tax Act, 1961 is allowable because the assessee filed the return claiming the deduction within the due date under Section 139(1) and the audit report in Form 10CCB was filed before completion of assessment. The appeal is allowed and the Assessing Officer is directed to grant the deduction.

Ratio Decidendi: For assessment years prior to the amendment effective 01.04.2020, the requirement to furnish the audit report in support of a Chapter VI-A deduction is a directory machinery provision and is satisfied if the audit report is produced before completion of assessment, provided the return claiming the deduction was filed within the due date under Section 139(1).

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