Income Tax Deduction u/s 10AA Cannot Be Denied for Delay in Filing Form 56F: Madras HC Dismisses Revenue's Appeal [Read Order]

The assessee, Astrotech Steels Private Limited had filed its return of income for AY 2018-19 on time but submitted Form 56F with a delay of approximately 50 days.

The Revenue had initially disallowed the assessee’s deduction claim of ₹7.48 crore under Section 10AA of income tax act, 1961 during processing under Section 143(1), citing non-filing of Form 56F along with the return.

A subsequent rectification application under Section 154 was also rejected. However, both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT) allowed the claim, terming the delay a procedural lapse rather than a substantive failure.

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The Revenue had argued that the filing of Form 56F within the prescribed timeline was mandatory and sought to rely on the Supreme Court’s decision in Wipro Ltd. to assert that procedural lapses invalidate claims for deduction. However, both the CIT(A) and the ITAT held that the delay was procedural and not fatal to the assessee’s substantive claim.

The High Court agreed with the ITAT that the facts in Wipro Ltd. were distinguishable. In Wipro, the assessee initially claimed a deduction and later sought to withdraw it to carry forward losses, an inconsistent stand.

In contrast, in the present case, it had consistently claimed the deduction under Section 10AA in its original return filed on time, with only a minor delay of 50 days in submitting Form 56F, which the Court held to be a procedural lapse not fatal to the claim, noted the court.

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Chief Justice K R Shriram and Justice Mohammed Shaffiq observed that “Assessee having duly fulfilled the substantial requirement as well as the procedural requirement, though there is a minor technical breach in fulfillment of the procedural requirement, the CIT(A) as well as the ITAT have opined that the delay in filing Form 56F would not be fatal to the substantive claim of the assessee. In fact, what has also weighed in the mind of the ITAT is that the same claim had been allowed to assessee and this was the sixth assessment year of claiming the amount of deduction.”

Accordingly, the revenue’s appeal was dismissed as no substantial question of law.

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