Income Tax Deduction u/s 10AA of Income Tax Act cannot be Availed without Tax Audit Report: ITAT [Read Order]

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the Income Tax deduction under Section 10AA of the Income Tax Act 1961 could not be availed without filing a tax audit report. 

The assessee Mahendra Kumar Damani filed his return of income for the AY 2016-17 on 16.10.2016 declaring total income after claiming a deduction under Section 10AA of the Act Income Tax Act 1961. The AO on 24.04.2017 determined total income and made an addition after disallowing deduction for non-filing of Audit Report in Form No.56F by an Accountant as required under Section 10AA(8) of the Act. 

T. Vasudevan, on behalf of the assessee submitted that the assessee could not file Audit Report in Form No.56F along with the return of income filed for the relevant assessment year, but such Audit Report had been filed on 01.03.2022. 

V.Sreenivasan on behalf of the revenue, referring to CIT v. Wipro Ltd. Submitted that filing of Audit Report as required under the law was mandatory for claiming any deduction. Since the assessee had not filed the Audit Report as required under the provisions of Sec.10AA (8) of the Act deduction could not be allowed.

The provisions of Sec.10AA of the Act deal with deduction towards the total income of newly established units in Special Economic Zones. As per sub-section 8 of 10AA of the Act, the provisions of sub-Section (5) of 10A of the Act, shall apply in relation to the deduction specified in Sec.10AA (1) of the Act. Sec.10A (5) of the Act, deals with the furnishing of an Audit Report from an Accountant along with a return of income for claiming deduction u/s.10A of the Act and said section is made applicable to sec.10AA of the Act also.

The Division Bench of V. Durga Rao (Judicial Member) And G. Manjunatha, (Accountant Member) dismissed the appeal referring to the decision of Hon’ble Supreme Court in CIT v. Wipro Ltd., which was rendered with reference to sec.10B (8) of the Act, squarely applicable to the facts and circumstances of the case. The plain language used in sec.10A(5) of the Act, is also clear and unambiguous that the condition of filing an Audit Report in Form No.56F along with the return of income is mandatory for allowing any deduction.

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