Denial of Section 80IA Deduction for Minor Delay in Filing Form 10CCB Held Unjustified

The ITAT Kolkata upheld the denial of deduction under section 80IA due to delayed filing of Form 10CCB was unjustified, relying on coordinate bench decisions in Desai Infra Projects and Sanjay Kukreja. The Tribunal held that since the assessee filed Form 10CCB before the return was processed under section 143(1) and had claimed the deduction in earlier years, the delay was minor and did not warrant denial. It was further held that filing Form 10CCB by the specified date is directory, not mandatory. The decision was against the revenue.

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ISSUES:

Whether the filing of audit report in Form 10CCB on or before the specified date under section 44AB of the Income Tax Act, 1961 is mandatory or directory for claiming deduction under section 80IA of the Act.Whether the Commissioner of Income Tax (CPC) has the jurisdiction to deny the claim of deduction under section 80IA while processing return of income under section 143(1) of the Act on the ground of delay in filing Form 10CCB.Whether denial of deduction under section 80IA on account of delayed filing of Form 10CCB falls within the scope of adjustments permissible under section 143(1)(a) of the Act.

RULINGS / HOLDINGS:

The filing of Form 10CCB on or before the specified date is not mandatory but directory, and if the audit report is filed before the assessment proceedings culminate, the requirement of section 80IA(7) is satisfied.The CPC does not have the power to deny the claim of deduction under section 80IA during processing of return under section 143(1) merely on the ground of delay in filing Form 10CCB, as such denial is beyond the scope of adjustments allowed under section 143(1)(a).Denial of deduction under section 80IA on the basis of delayed filing of Form 10CCB does not constitute an "incorrect claim, if such incorrect claim is apparent from any information in the return" within the meaning of Explanation (a) to section 143(1)(a), nor does it fall under sub-clause (v) relating to returns filed beyond due date, when the return itself was filed within the due date.Precedents from various High Courts and coordinate benches of the Tribunal hold that the requirement of filing audit report under section 80IA(7) is directory and substantial compliance is achieved if the report is filed before completion of assessment.The order of the Commissioner of Income Tax (Appeals) deleting the addition and allowing the deduction under section 80IA is upheld.

RATIONALE:

The Court applied the provisions of sections 80IA(7), 44AB, 139(1), and 143(1)(a) of the Income Tax Act, 1961, along with Rule 18BBB, focusing on the interplay between the timing of filing audit reports and claiming deductions.The Court relied on judicial precedents including decisions of the Hon'ble Supreme Court in G.M. Knitting Industries Pvt. Ltd. and various High Courts (Delhi, Madras, Gujarat, Bombay, Allahabad, Uttarakhand, Karnataka, and Calcutta) which have consistently held that the filing of audit reports along with the return is directory and not mandatory.The Court distinguished between exemption provisions under Chapter III (which require strict compliance) and deduction provisions under Chapter VI-A (which allow for some flexibility), emphasizing that section 80IA falls under Chapter VI-A.The Court noted that the denial of deduction by CPC during processing under section 143(1) is limited to specific adjustments enumerated in section 143(1)(a), and delay in filing Form 10CCB does not fall within those adjustments.The Court followed coordinate bench decisions of the Tribunal which set aside orders denying deduction for delayed filing of Form 10CCB when the report was filed before assessment completion.No dissenting or concurring opinions were recorded.

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