Income Tax Deduction u/s 80JJAA cannot be denied due to Delay in filing Audit Report Form 10DA: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune Bench, has ruled that a delay in filing an audit report in Form 10DA is not a ground to deny an income taxdeduction claim under Section 80JJAA of the Income Tax Act, 1961.

The assessee, Expert Global Solutions Private Limited, filed its return of income for the assessment year (AY) 2021-22 on 16.02.2022, declaring a total income of ₹8,12,99,130 and claiming a deduction of ₹26,06,220 under Section 80JJAA. The claim was disallowed on the ground that Form 10DA was filed beyond the prescribed due date.

The Additional/Joint Commissioner of Income Tax (Appeals) (Addl./JCIT(A)) upheld the disallowance, noting that the CBDT Circular had extended the audit report filing deadline only up to 15.02.2022. A similar disallowance of ₹15,96,293 was made for the assessment year 2022-23.

Aggrieved, the assessee has filed appeals for both assessment years, and both appeals were heard together.

The appellant contended that the deduction claimed for AY 2021-22 represented only the balance deduction from assessment years 2019-20 and 2020-21, which were already examined and allowed. He argued that Form 10DA is a directory requirement and that procedural non-compliance cannot defeat a substantive deduction entitlement.

He relied on the Kolkata Bench ruling in Tarasafe International (P.) Ltd. vs. DDIT (2024) and the Supreme Court decisions in CIT vs. G.M. Knitting Industries (P.) Ltd. (2016) and PCIT vs. Wipro Ltd. (2022), where the tribunal had allowed similar deductions.

The Revenue relied on the orders of Addl./JCIT(A) and submitted that the assessee had failed to fulfill the statutory conditions and the timeline for filing the form, thus warranting the disallowance.

The bench comprising R.K. Panda (Vice President) and Astha Chandra (Judicial Member) noted that the issue was covered by the Kolkata bench's ruling in Tarasafe International, which had followed G.M. Knitting Industries, which held that filing of an audit report before finalization of assessment is sufficient to sustain the deduction claim.

The Tribunal further observed that the Supreme Court in Wipro Ltd. had itself distinguished the two lines of precedent, holding that strict compliance is required only for exemption provisions under Chapter III. In contrast, the deduction provisions under Chapter VIA, including Section 80JJAA, are governed by the more liberal principle laid down in G.M. Knitting Industries.

Accordingly, both appeals were allowed.

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