Once Form 10CCB Filed Prior to Processing, Deduction Cannot be Disallowed: ITAT allows 8.7Cr Deduction u/s 80IB [Read Order]

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has held that once the audit report in Form 10CCB is filed before the processing of the return, the deduction under Section 80IB(11A) cannot be denied.

The tribunal allowed its claim of ₹8.73 crore, overturning the disallowance made by the Centralized Processing Centre (CPC) and upheld by the CIT(A)-6.

The assessee, Sahyadri Farmers Producer Company Limited, filed its return of income for Assessment Year 2017-18 on November 7, 2017, declaring nil taxable income after claiming a deduction of ₹8,73,57,767 under Section 80IB(11A) of the Income-tax Act.

However, while processing the return under Section 143(1), the Centralized ProcessingCentre (CPC) disallowed the entire deduction on the ground that the mandatory audit report in Form 10CCB had not been filed along with the return.

The assessee later submitted that although Form 10CCB was not filed with the return, it was duly furnished in response to CPC’s communication and was very much available on the record before processing of the return. The assessee approached the Income Tax Appellate Tribunal [ITAT] after the CIT(A) maintained the CPC's disallowance in spite of this.

The assessee argued that filing Form 10CCB is a procedural requirement, and the deduction should not be denied when the audit report was already submitted before the issuance of the 143(1) intimation. It relied heavily on judicial precedents, including the Supreme Court’s decision in G.M. Knitting Industries , which held that an audit report filed before completion of assessment is sufficient compliance for deduction claims under Chapter VI A.

The Departmental representative contended that the delayed filing rendered the claim defective and cited judgments PCIT vs. Wipro Ltd. (2022), arguing for strict compliance. However, the ITAT distinguished the Wipro ruling as pertaining to exemption provisions, which are stricter, whereas Section 80IB falls under deductions, requiring a more liberal interpretation.

The Bench comprising Justice Vinay Bhamore [Judicial Member] and Mr Manish Borad [ Accountant Member] noted that Form 10CCB was filed before the processing of the return under Section 143(1), and therefore the CPC ought not to have denied the deduction. It also relied on a recent jurisdictional precedent, Desai Infra Projects (I) Pvt. Ltd. vs. CIT , which supported the assessee’s stand.

Holding that the assessee had substantially complied with the law, the Tribunal observed: “We are of the considered opinion that the assessee cannot be denied deduction u/s 80IB(11A) since the audit report in Form 10CCB was furnished prior to processing of the return.”

Accordingly, the ITAT set aside the order of the CIT(A)-6, and directed the Assessing Officer/CPC to allow the deduction in full.

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