Manufacturer’s 80IC Deduction Allowed: ITAT Declares Audit Report Filing Directory, allows Assessee’s Appeal [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench allowed an appeal against denial of deduction under Section 80IC of the Income Tax Act, 1961, declaring that filing of an audit report along with the return is directory in nature, not mandatory, provided the report is furnished before completion of assessment.

The appellant, Bhagwan Precision, is a firm engaged in the manufacturing and sale of precision turned parts with its unit in Haridwar, claimed deduction under Section 80IC for Assessment Year 2017-18 of Rs. 84.36 lakhs, filed its return of income under Section 139(1) declaring Rs. 2.53 crore.

While the audit reports under Section 44AB and Section 80IC (Form 10CCB) were dated 02 August 2017, the audit report in Form 10CCB was filed with the revised return under Section 139(5). The Assessing Officer (AO) denied the deduction for non-filing of Form 10CCB with the original return, and the Commissioner of Income Tax (Appeals),Chennai [Ld. JCIT(A)] confirmed this denial.

The appellant was represented by Advocate Shri Ved Jain and Chartered Accountant Shri Ayush Garg, and argued that since the deduction was claimed in the original return filed within the due date under Section 139(1), filing of the audit report with the revised return cured any procedural lapse.

It was submitted that the original and revised returns reflected the same income and claim, and judicial precedents consistently held that the requirement to file Form 10CCB with the return is directory. Reliance was placed on judgments including CIT v. Contimeters Electricals Pvt. Ltd. (Delhi High Court), among others.

The Revenue was represented by Senior Departmental Representative Shri Rajesh Tiwari. He supported the orders of the lower authorities, emphasizing that the statutory requirement of filing Form 10CCB along with the return had not been complied with and that this justified denial of deduction.

The Bench comprising of Judicial Member Satbeer Singh Godara and Accountant Member S. Rifaur Rahman observed that the assessee had claimed deduction under Section 80IC in the original return filed under Section 139(1).

The Tribunal noted that the assessee had claimed deduction in the original return under Section 139(1) and later filed Form 10CCB with the revised return, holding that judicial precedents confirm delayed filing does not bar claims if reports are furnished before assessment completion.

Referring to the Delhi High Court ruling in CIT v. Contimeters Electricals Pvt. Ltd., the Tribunal reiterated that filing the audit report with the return is not mandatory but directory.

Accordingly, the assessee was held entitled to deduction under Section 80IC, and the appeal was allowed.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates