Assessee entitled to Section 80JJAA deduction despite late Form 10DA filing; procedural lapse not a denial reason

The ITAT Delhi held that the assessee is entitled to claim deduction under section 80JJAA despite not filing Form 10DA with the original return, as it was submitted with the revised return before the CPC processed it. The procedural lapse of delayed filing did not justify denial of the deduction. The matter was remitted to the AO/CPC for limited verification of the quantification of the allowable deduction, with directions for the assessee to produce relevant documents. The appeal was allowed for statistical purposes.

---

---

ISSUES:

Whether the denial of deduction under section 80JJAA of the Income Tax Act, 1961, on the ground of belated filing of Form 10DA is justified.Whether the requirement of furnishing Form 10DA for claiming deduction under section 80JJAA is mandatory or directory.Whether reliance on section 80AC of the Act to deny deduction under section 80JJAA is legally correct.Whether interest under section 234C of the Act was rightly charged.

RULINGS / HOLDINGS:

The denial of deduction under section 80JJAA solely on the ground of belated filing of Form 10DA is not justified, as the requirement of furnishing the accountant's report in Form 10DA is "directory in nature" and "substantial compliance" is sufficient.The filing of Form 10DA after the original return but before the completion of assessment proceedings amounts to sufficient compliance, entitling the assessee to claim deduction under section 80JJAA.The reliance on section 80AC of the Act to deny deduction under section 80JJAA is erroneous and not applicable on the facts of the case.The interest charged under section 234C was not specifically upheld or reversed but the appeal was allowed for statistical purposes with directions for verification of quantification of deduction.

RATIONALE:

The Court applied the statutory provisions of section 80JJAA of the Income Tax Act, 1961, which mandates furnishing an accountant's report in Form 10DA before the specified date under section 44AB, but held that this requirement is procedural and directory rather than mandatory.Precedent from the Hon'ble Supreme Court and coordinate benches were relied upon, including the ruling that belated filing of prescribed forms during assessment proceedings is sufficient for claiming deductions (e.g., Commissioner of Income-Tax v. G.M. Knitting Industries and Sai Computers Ltd v. Assistant Director of Income Tax).The Court distinguished the applicability of section 80AC, which restricts deductions for belated returns, noting that the return in question was revised and the Form 10DA was filed before assessment completion.The interpretation of the word "shall" in the statute was examined, recognizing that while generally mandatory, it may be considered directory depending on the object and consequences of the provision; here, the procedural nature of Form 10DA filing supports a directory interpretation.The Court remitted the matter to the Assessing Officer/CPC for limited verification of the quantification of the allowable deduction under section 80JJAA, emphasizing the assessee's right to produce relevant documentary evidence.

---