BHAGWAN PRECISION,ROHTAK V. ASSTT. COMMISSIONER OF INCOME TAX, ROHTAK

ITA 5174/DEL/2024

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The case involves Bhagwan Precision, a firm engaged in manufacturing and sale of precision turned parts, which appealed against the order of the CIT (Appeals) sustaining the rejection of their claim for deduction under section 80IC of the Income Tax Act, 1961. The deduction was initially claimed in the original return filed on 21.10.2017 but was rejected due to the non-filing of the audit report in Form 10CCB by the due date. The Tribunal considered various judicial precedents and the provisions of sections 80A(5) and 80AC, concluding that the filing of the audit report is directory and not mandatory, and thus the assessee was eligible for the deduction claimed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716869 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 11-11-2024
• Other Referred Cases: Jitendra Kumar Nuhata vs. JCIT, DCIT, Hyderabad vs. Delhi MSW Solutions Ltd., Dunichand Khitri Raja vs. ACIT, CIT, Delhi vs. Contimeters Electricals Pvt. Ltd., Shree Bhavani Power Projects Pvt. Ltd. vs. ITO, Pr.CIT-1, Bhopal vs. M/s. Kilpest India Ltd., ACIT vs. Green Dot Health Foods Pvt. Ltd., Kumaon Exports Pvt. Ltd. vs. DCIT, A.R. Industries vs. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH TIWARI
• Assessee Lawyers: VED JAIN
• Keywords: Revised return; Competent authority
• Section: 139; 234B; 10B; 10AA; 139(5)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES ‘A’, NEW DELHI. BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER and SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.5174/DEL/2024 (Assessment Year: 2017-18) Bhagwan Precision, vs. ACIT, 35, Subhash Nagar, Model Town, Rohtak. Rohtak – 124 001 (Haryana). (PAN : AAJFB6625K) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Ved Jain, Advocate Shri Ayush Garg, CA REVENUE BY : Shri Rajesh Tiwari, Sr. DR Date of Hearing : 19.05.2025 Date of Order : 18.08.2025 O R D E R PER S.RIFAUR RAHMAN,AM: 1. The assessee has filed appeal against the order of the Learned Addl./JCIT (Appeals)-6, Chennai [“Ld. JCIT(A)”, for short] dated 28.09.2024 for the Assessment Year 2017-18. 2. At the time of hearing, ld. AR of the assessee brought to our notice brief fact of the case that assessee is a firm engaged in the business of manufacturing and sale of precision turned parts. The works of the assessee is at Industrial Part IV, Plot No.9 V, Begampur (Haridwar), Printed from counselvise.com 2 ITA No.5174/DEL/2024 Uttarakhand and the assessee is claiming deduction u/s 80IC of the Income-tax Act, 1961 (for short ‘the Act’) from AY 2010-11. For the year under consideration, the assessee filed its return of income on 21.10.2017 u/s 139 of the Act declaring an income of Rs.2,53,10,300/- after claiming deduction of Rs.84,36,767/- u/s 80IC of Enterprises in Special Category States. Copy of the ITR acknowledgement along with computation of income is also placed on record. The assessee had got its accounts duly audited within prescribed time and audit reports u/s 44AB in Form 3CB-3CD and u/s 80IC in Form No.10CCB were also obtained on the same date itself i.e. on 02.08.2017. Since the assessee has filed the revised return of income and also filed audit report in Form 10CCB along with revised return of income, the Assessing Officer rejected the claim of the assessee u/s 80IC of the Act. Aggrieved, assessee preferred an appeal before the ld. CIT (A) and ld. CIT (A) sustained the same. 3. Aggrieved, assessee is in appeal before us raising following grounds of appeal :- “1. The order of the ld. CIT (Appeals) NFAC, Delhi dated 18.09.2024 is against facts and is bad in law. 2. The ld. CIT (Appeals) NFAC) has erred in confirming the rejection of deduction claimed amounting to Rs.84,36,767/- u/s 80IC of the Income Tax Act made by the DCIT CPC Bangalore for want of Audit Report on Form No.10CCB while processing the return of income for issuing intimation order dated 14.04.2019. Printed from counselvise.com 3 ITA No.5174/DEL/2024 3. The ld. Commissioner of Income Tax (Appeals) failed to appreciate that since the original return of income and Audit Report u/s 44AB were filed within the due date prescribed u/s 139 (1), the revised return of income filed u/s 139(5) of the Act was a valid return. 4. The ld. CIT (Appeals) failed to appreciate that the deduction u/s 80IC cannot be denied vide intimation u/s 143(1), without calling the appellant. 5. The assessing officer has erred in levying interest u/s 234B and 234C amounting to Rs.7,73,070/- and Rs.1,47,452/- respectively. 4. At the time of hearing, ld. AR submitted that through the Audit Report on Form No.10CCB dated 02.08.2017 regarding claim of deduction was filed along with the revised return of Income, he submitted that the figure of original returned Income & Revised Returned Income are same. He submitted that revised return is filed due to non filing of Audit Report on Form 10CCB along with original return of Income. He submitted that it is not the case of the assessee that it had claimed the deduction u/s 80IC in revised return of Income and the assessee had made claim of deduction in original return of income filed on 21.10.2017 itself. He further submitted that Audit Report u/s 44AB was also filed before the due date of filing of return of income i.e. 07.11.2017. He submitted that the return was processed by CPC on 15.04.2019 and rejected the claim of deduction u/s 80IC holding that Form No.10CCB was not e-filed within the due date. He further submitted that original return filed on 21-10-2017 was Printed from counselvise.com 4 ITA No.5174/DEL/2024 not processed. The ld. AR again submitted that the initial assessment year for claiming deduction u/s 80IC was 2010-11 and the Chartered Accountant has clearly shown that the claim of the assessee u/s 80IC is of Rs.84,36,767/- and the assessee has also claimed in the original return of income u/s 139(1) of the Act for the same amount of Rs.84,76,767/-. The ld. AR further submitted that as the revised return has been processed and the original return was on time, therefore the assessee is eligible for deduction u/s 80IC in view of various judicial rulings with regard to provisions of Section 80IC, which places the restricted clauses for denial of deduction, if the returns are not filed within the due date. He submitted that now there are two issues, the first issue is regarding eligibility of deduction u/s 80IC based on return which has been filed after the filing of original return and the filing of Form 10CCB. He further brought to our notice the provisions of section 80A(5) and 80AC as under :- “Section 80A(5) Where the assessee fails to make a claim ill his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading \"C. - Deductions in respect of certain incomes\", no deduction shall be allowed to him there under.]\" Section 80AC Printed from counselvise.com 5 ITA No.5174/DEL/2024 Deduction not to be allowed unless return furnished.- Where in computing the total income of an assessee of the previous year relevant to the assessment year commencing on the 1st day of April, 2006 or any subsequent assessment year, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or Section 80-IC, no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (I) of section 139.\" He submitted that a reading of the both sections 80A(5) and 80AC, it emerges that to make a claim u/s 80IA, the assessee is simply required to file the return of income u/s 139(1) and the claim can be made in the revised return of income also i.e. there is no bar for making the claim even in the return of income filed u/s 139 (5) of the IT Act. In this regard, he relied on the following judgments in support of its submissions:- (i) Jitendra Kumar Nuhata vs. JCIT (ITAT Bangalore); (ii) DCIT, Hyderabad vs. Delhi MSW Solutions Ltd. (Hyderabad ITAT); (iii) Dunichand Khitri Raja vs. ACIT (Bangalore ITAT). He submitted that in all the above said judgments, the ITAT Benches have held that the claim made by the assessee in the original return of Income, but Audit Report on Form 10CCB filed with revised return, the claim of deduction under chapter VI-A is allowable. He further submitted that regarding counter Arguments and grant of opportunity to Printed from counselvise.com 6 ITA No.5174/DEL/2024 submit objections as per Annexure attached with the notice u/s 250 that Audit Report in Form 10CCB was not filed along with the return of income, which can be cured only when the competent authority condones the delay. In this respect, the ld. AR submitted that it had nowhere in the submissions made before that the delay in filing the Audit Report on Form 10CCB be condoned. The ld. AR mentioned that the assessee had made claim of deduction in the original return of income and only revised it subsequently and the assessee did not file the form 10CCB during the course of filing of original return but filed it subsequently in the revised return. Accordingly, ld. AR further submitted that the report was furnished before the completion of assessment and filing or Audit Report along with the return of Income is not mandatory but directory, in this case, the same was filed before the completion of assessment, the requirement of section 80IC would be met. In this regard, he relied on several cases and filed the same in the case law compilation. Some of the case laws relied upon are given as under :- (i) CIT, Delhi vs. Contimeters Electricals Pvt. Ltd. – 2008 (12) TMI 4 dated 02.12.2008; (ii) Shree Bhavani Power Projects Pvt. Ltd. vs. ITO – 2024 (8) TMI 938; (iii) Pr.CIT-1, Bhopal vs. M/s. Kilpest India Ltd. – 2020 94) TMI 824 dated 07.01.2020; Printed from counselvise.com 7 ITA No.5174/DEL/2024 (iv) ACIT vs. Green Dot Health Foods Pvt. Ltd. 2023 (2) TMI 516 dated 09.02.2023; (v) Kumaon Exports Pvt. Ltd. vs. DCIT 2024 (12) TMI 424 date d05.12.2024; (vi) A.R. Industries vs. DCIT 2024 (3) TMI 939 dated 25.01.2024. 5. On the other hand, ld. DR of the Revenue brought to our notice para 4.1.6 of the ld. CIT (A) order and heavily relied on the findings of the lower authorities. 6. Considered the rival submissions and material placed on record. We observe that the assessee has claimed the deduction u/s 80IC in original return of income filed u/s 139(1), however assessee subsequently filed revised return of income and also submitted audit report in Form 10CCB along with revised return of income. The lower authorities rejected the same. We observe that similar issue was considered by various Courts and it was held that it is mandatory for the assessee to claim the deduction u/s 80IC in its return of income. Once assessee claimed the same in the return of income, assessee is eligible to claim the same. In the present appeal, assessee has claimed the deduction u/s 80IC in original return u/s 139(1) itself, however revised the ROI and claimed deduction u/s 80IC and filed the audit report. What is relevant is, assessee has to claim deduction in its return of income as per section 80AC of the Act. In this Printed from counselvise.com 8 ITA No.5174/DEL/2024 regard, we observe that assessee has already claimed the deduction u/s 139(1) of the Act. Mere revision u/s 139(5) will not bar the assessee to claim the deduction u/s 80IC. 7. With regard to delay in submission of audit report, we observe that several courts have held that the assessee to file the audit report along with return were only directory in nature and not mandatory. We observe that Hon’ble Delhi High Court in the case of CIT vs.. Contimeters Electricals Pvt. Ltd. (supra) have held as under :- “After issuance of the notice the Commissioner of Income Tax passed the order dated 29.03.2007 whereby he held that that he was fully satisfied that the assessment which had been completed by the Assessing Officer was prejudicial to the interest of the revenue and that it was erroneous in as much as the assessee had not satisfied the conditions laid down under Section 80-IA and consequently the deduction under that section for the sum of Rs 14,27,351/- had been wrongly allowed. The CIT(A), therefore, cancelled the assessment which had been earlier framed and directed the Assessing Officer to complete the assessment as per law, in terms of the directions given in the said order. Being aggrieved by the said order, the assessee preferred an appeal before the Tribunal which was allowed by the Tribunal by virtue of the impugned order. The Tribunal took the view that the provisions of section 80- IA(7) with regard to filing of the audit report along with the return were not mandatory and were merely directory. In coming to such conclusion, the Tribunal referred to the decision of the Gujarat High Court in CIT v. Gujarat Oil & Allied Industries, 201 ITR 325 (Guj). In that decision the provisions of Section 80J(6A) were considered. The wording of Section 80J(6A) is similar to that of section 80-IA(7) which is in issue in the present appeal. The Gujarat High Court took the view that the word “shall” which occurs in section 80J(6A) be read as “may” and that the requirement “of filing of an audit report along with the return was only to be taken as directory in nature. The Gujarat High Court took the view that in case the audit report is submitted at any time before the framing of the assessment, there would be substantial compliance with the provisions of Section 80J(6A). The Tribunal also relied on the decision of the Madras High Court in CIT v. A.N. Arunachalam, 208 ITR 481 (Mad), which, again, while considering the provisions of Section 80J(6A), took the same view as that of the Gujarat High Court. Printed from counselvise.com 9 ITA No.5174/DEL/2024 We notice that there are other decisions of other Courts taking the same view. The decisions being, CIT v. Shivanand Electricals (1994) 209 ITR 63 (Bombay); Zenith Processing Mills v. CIT (1996) 219 ITR 721 (Guj.); CIT v. Jayant Patel (2001) 248 ITR 199 (Mad) and CIT v. Mahalaxmi Rice Factory (2007) 294 ITR 631 (P&H). In view of this long line on decisions of various High Courts in considering the provisions of Section 80J(6A) which are similar to the provisions of Section 80-IA(7), we feel that the Tribunal has arrived at the correct conclusion that the requirement of filing the audit report along with the return is not mandatory but directory and that if the audit report is filed at any time before the framing of the assessment, the requirement of section 80-IA(7) would be met.” 8. Respectfully following the above decision and other similar decisions, we are inclined to hold that the assessee is eligible to claim deduction u/s 80IC who had claimed the deductions u/s 80IC in filing return of income u/s 139(1) and 139(5) and duly submitted the audit report before completion of the assessment. Therefore, we are inclined to allow the grounds raised by the assessee. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on this 18th day of August, 2025. Sd/- sd/- (SATBEER SINGH GODARA) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 18.08.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "