Deduction under section 80IAC: non-filing of Form 10CCB is procedural and may be remedied; allow deduction if substantiated.

Denial of deduction under section 80IAC solely for non-filing of Form No. 10CCB is procedural and remediable: where the assessee is a recognised start up, accounts were audited under section 44AB and the tax auditor certified the deduction, the absence of the prescribed form in the return-given practical difficulties with the form/online fields-does not justify summary disallowance under section 143(1)(a)(ii). The correct approach is to permit the assessing officer to obtain the audit report in Form No. 10CCB during assessment and allow the deduction if the claim is substantiated.

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Issues: (i) Whether denial of deduction claimed under section 80IAC of the Income-tax Act, 1961 by invoking section 143(1)(a)(ii) on the ground that Form No. 10CCB was not filed is sustainable, and if non-filing of Form No. 10CCB is mandatory or directory in nature.

Analysis: The Tribunal examined the statutory scheme under section 80IAC read with section 80IA(7) and the requirements of audit report submission. It noted that the assessee is a DPIIT-recognised start-up, had its accounts audited under section 44AB, and the tax auditor certified the deduction in the tax audit report. The Tribunal observed that Form No. 10CCB as prescribed (Notification No. 43/2005 dated 04.02.2005) and Rule 18BBB are framed with reference to specified sections and that practical difficulties arose because the form/online facility did not contain explicit fields for certification in respect of section 80IAC. The Tribunal further considered precedent and principles regarding directory versus mandatory filing of prescribed forms in the context of summary assessment under section 143(1). Balancing the statutory requirement for an audit report and the assessee's documented eligibility, the Tribunal concluded that the failure to furnish Form No. 10CCB in the return amounted to a procedural/technical lapse that could be remedied and did not warrant denial of the substantive deduction without giving the assessee an opportunity to furnish the required form during regular assessment proceedings.

Conclusion: The denial of deduction under section 80IAC solely on account of non-filing of Form No. 10CCB is not sustained; the matter is remitted to the assessing authority to obtain the audit report in Form No. 10CCB and, if the assessee's claim is genuine, the deduction should be allowed. This conclusion is in favour of the assessee.

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