Deduction under Section 80JJAA allowed despite Form 10DDA acceptance after due date when substantive compliance exists

ITAT Ahmedabad allowed assessee's appeal for deduction u/s 80JJAA despite Form 10DDA not being accepted before the due date for filing return. The chartered accountant had filed Form 10DA before the due date, but assessee accepted it only on 06.01.2023. Since the order u/s 143(1) was passed on 16.03.2023 and the form was available with assessing officer before assessment, ITAT held that filing is procedural and deduction cannot be denied for procedural lapse when substantive compliance exists.

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Issues Involved:
1. Whether the deduction under Section 80JJAA of the Income Tax Act was correctly disallowed due to the late filing of Form 10DA.
2. Whether procedural lapses in filing Form 10DA can be excused if the form was available before the assessment was completed.

Issue-wise Detailed Analysis:

1. Disallowance of Deduction under Section 80JJAA:
The Assessee filed its return of income for the Assessment Year 2022-23 declaring a total income of Rs. 1,50,72,480/-. The return was processed under Section 143(1) of the Income Tax Act, determining the total income at Rs. 1,76,55,670/-. The Centralized Processing Centre (CPC) rejected the Assessee's claim for a deduction under Section 80JJAA amounting to Rs. 25,83,187/- due to the late filing of Form 10DA. The Assessee contended that the Form 10DA was uploaded by the Chartered Accountant on 01.10.2022, before the extended due date of 07.10.2022, but was accepted by the Assessee only on 06.01.2023, after the due date.

The CIT(A) upheld the CPC's decision, emphasizing that as per Rule 19AB of the Income Tax Rules, 1962, the Form 10DA must be filed along with the return of income under Section 139(1) of the Act. The CIT(A) cited the Supreme Court's decision in Principal Commissioner of Income Tax-III, Bangalore vs. M/s Wipro Limited, which held that the requirement of filing a declaration within a timeline is "mandatory." The CIT(A) also referred to the Supreme Court's decision in CC v. Dilip Kumar & Company, which stated that exemption provisions should be interpreted strictly, and the onus is on the Assessee to prove compliance with the statutory provisions.

2. Procedural Lapses and Availability of Form 10DA:
The Assessee appealed to the ITAT, arguing that the procedural lapse of not accepting the Form 10DA before the due date should not result in the denial of the deduction. The Assessee relied on the Gujarat High Court's decision in the case of Association of Indian Panel Board Manufacturer, which held that the procedural aspect of filing the audit report should not impede the claim for exemption if the report was available with the Assessing Officer at the time of assessment.

The ITAT observed that this was not the first year the Assessee claimed the deduction under Section 80JJAA and that the Form 10DA was indeed uploaded before the due date. The ITAT noted that the form was accepted by the Assessee on 06.01.2023, before the order under Section 143(1) was passed on 16.03.2023. The ITAT referred to the Gujarat High Court's decision, which emphasized that the mode and stage of filing the audit report are procedural aspects and that the claim for deduction should not be denied if the report is available before the assessment order is framed.

The ITAT also cited the Supreme Court's decision in CIT v. GM Knitting Industries, which held that the Assessee is entitled to claim a deduction if the required certificate is filed before the final assessment order, even if it was not filed with the return of income.

Conclusion:
The ITAT concluded that the claim for deduction under Section 80JJAA should not be denied due to the procedural lapse of late acceptance of Form 10DA. The ITAT allowed the Assessee's appeal, noting that the form was uploaded before the due date, accepted before the final assessment, and that similar procedural lapses had been excused in previous judicial decisions.

Judgment:
The appeal of the Assessee was allowed, and the disallowance of the deduction under Section 80JJAA was reversed. The ITAT's order was pronounced in open court on 20/05/2024.

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