The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) ruled that the filing of Form 10CCB, required for claiming deductions under Section 80IA of the Income Tax Act, is not mandatory if it is submitted before the conclusion of the assessment process.
Hi Tech Systems & Services Limited, the assessee, is engaged in operating wind power plants and is eligible for deductions under Section 80IA of the Income Tax Act. The assessee filed its income tax return on 07.11.2022, within the extended deadline set by the CBDT for the assessment year (AY) 2022-23.
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The audit report in Form 10CCB was submitted on 11.10.2022, four days after the statutory deadline of 07.10.2022. The Centralized Processing Center (CPC) denied the assessee’s deduction claim of Rs. 5,88,89,613 during the processing of its return, citing the late filing of Form 10CCB as a violation of Section 80IA(7). The CPC held that timely submission of the form was mandatory.
On appeal, the CIT(A) explained that the filing of Form 10CCB before the specified date was not mandatory but a directory. The CIT(A) observed that the audit report was filed before the return was processed and that several rulings supported the allowance of such deductions despite procedural delays.
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The revenue challenged this decision before the ITAT arguing that the CPC was correct in denying the deduction as the audit report was not filed within the prescribed timeframe. The assessee’s counsel argued that the delay was minor and that the audit report was submitted well before the return processing date fulfilling substantial compliance.
The two-member bench comprising Sanjay Garg (Judicial Member) and Sanjay Awasthi (Accountant Member) examined relevant judicial rulings in Desai Infra Projects (I) Private Limited vs. CIT and Contimeters Electricals Pvt. Ltd. vs. CIT which held that minor procedural delays should not invalidate a legitimate deduction if compliance was achieved before assessment proceedings were concluded.
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The ITAT observed that Hi-Tech Systems & Services Limited filed its audit report before the return was processed and had consistently claimed and received similar deductions in earlier years. The tribunal determined that the denial of the deduction exceeded the scope of adjustments permissible under Section 143(1)(a) of the Income Tax Act, 1961.
The tribunal dismissed the revenue’s appeal and upheld the CIT(A)’s decision. The appeal was allowed.
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