The Chennai bench of the Income Tax Appellate Tribunal (ITAT), has held that debatable issues cannot be adjusted on mere intimation u/s 143 and allows deduction u/s.80JJAA.
The appellant, M/s. Tangar Exports LLPhas claimed deduction u/s.80JJAA of the Income Tax Act, 1961, for Rs.1,76,543/- for employing new employees. During scrutiny assessment, the Assessing Officer rejected deduction alleging that the assessee has not filed an audit report, as required under the provisions of section 44AB of the Income Tax Act, 1961, in Form No.10DA.
On appeal, the CIT(A) confirmed the assessment order holding that filing of audit report in Form No.10DA is a pre-condition for claiming deduction u/s.80JJAA of the Income Tax Act, 1961. The aggrieved appellant filed an appeal before the ITAT.
The counsel for the appellant submitted that the assessee is not required to file an audit report in Form 10DA for every year, when the assessee has claimed the deduction in the previous financial year and has complied with necessary conditions, including the filing of the audit report in Form 10DA.
The Appellant counsel further submitted that the computation of total income in the intimation received u/s.143(1) is not correct, as per provisions of section 143(1), only prima-facie adjustment can be made, but not on such issues which need verification.
The Coram of V. Durga Rao, Judicial Member,and Mr. G. Manjunatha, Accountant Member observed that the issue is highly debatable which can be resolved by deliberation, including verification of necessary documents and the Assessing Officer cannot make adjustments towards deduction u/s.80JJAA of the Act, while processing return u/s.143(1) of the Income Tax Act, 1961.
The Authority has held that “we direct the Assessing Officer to delete additions made towards disallowance of deduction claimed u/s.80JJAA of the Income Tax Act, 1961”.
Mr. A.Mahesh and Mr. P.Sajit Kumar appeared on behalf of the appellant and the respondent respectively.
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