TMI Blog2020 (4) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 139 of the Act which provides for filing of revised return and rectification of defect in the return and, therefore, the requirement of filing the duly audited report along with the return was held to be not mandatory. Be it noted, the provision under Section 32AB(5) of the Act is similar to Section 80-IA(7) of the Act. Therefore, we are unable to take any different view in the matter than the one arrived at by the Punjab and Haryana High Court in Punjab Financial Corporation (supra). First point under issue No.(a) is held in affirmative. Where the assessee files the audit report in Form No.10CCB before completion of the assessment, we do not find any reason to hold that the condition envisaged under Section 80-IA of the Act had not been fulfilled. Benefit as admissible in case of reassessment proceedings - Basic purpose of Section 148 of the Act is merely to empower the Assessing Authority with the machinery for assessment. Fundamentally, both the assessment and reassessment need the same machinery. In other words, the provisions relating to regular assessments shall apply to the assessment made pursuant to the notice of reassessment. Once that is so, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Sanjay Lal, Advocate For the Respondent : None JUDGMENT (Oral) PER: AJAY KUMAR MITTAL, CHIEF JUSTICE: This appeal under Section 260-A of the Income Tax Act, 1961 (for short the Act ) has been preferred by the Revenue being aggrieved by an order dated 21.09.2015 passed by the Income Tax Appellate Tribunal, Indore Bench, Indore (hereinafter referred to as the Tribunal ) in ITA No. 175/Ind/2014 whereby the order of the Commissioner of Income Tax (Appeals) [for brevity the CIT(A) ] allowing the relief to the assessee under Section 80-IA of said Act has been affirmed and the appeal of the Revenue has been dismissed. 2. The appeal was admitted on 20.06.2017 for determination of the following two substantial questions of law:- A. Whether on the facts and in the circumstances of case, the ITAT erred in upholding the order of CIT(A) which the Ld. CIT(A) held that the Unit-II was eligible for claiming deduction u/s 80-IA of the Act, where it had not filed form No.10CCB alongwith return of income in original assessment proceedings? B. Whether on the facts and in the circumstances of the case, the ITAT erred in upholding the order of CIT(A) in which the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) with the direction to allow the deduction under Section 80-IA of the Act, as claimed by the assessee. Against the order of the CIT(A)-I second appeal was carried by the Revenue before the Tribunal, which has been dismissed vide order dated 21.09.2015 (Annexure A-3). In this background, the order of the Tribunal has been assailed in this appeal. 4. It is stated that though the tax effect involved in the appeal is only ₹ 5,84,158/- which is below the prescribed monetary limit for filing appeal before the High Court in view of the CBDT s circular No.21/2015 dated 10.12.2015 but since the proceedings under Section 147 of the Act were initiated at the instance of the Revenue Audit Party, therefore, the appeal is covered under the exceptions provided in the circular dated 10.12.2015. However, a preliminary objection was raised in this regard by the learned counsel for the assessee at the time of motion hearing, which was declined by order dated 22.03.2017 and thereafter, the appeal was admitted on the substantial questions of law, as noted above. However, today, nobody has chosen to appear on behalf of the assessee. 5. Learned counsel for the appellant has vehemently ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the assessee who fails to file the audit report under Section 80-IA(7) of the Act along with the original return of income filed under Section 139 of the Act but presents the same during the course of assessment proceedings under Section 143 of the Act, is entitled to deduction under Section 80-IA thereof. (ii) If answer to issue (i) above, is in affirmative, then whether the said benefit is admissible in the reassessment proceedings when no audit report had been filed during the original assessment proceedings but was presented only in reassessment proceedings. 9. Before considering the first point with regard to non-fulfillment of requirement of filing the audit report in Form No.10CCB by the assessee and the question as to whether the condition envisaged under Section 80- IA(7) of the Act for claiming deduction in respect of profits and gains is mandatory or directory, it would be apt to refer to the relevant provisions of the Act, which read, thus:- Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. - 80-IA. (1) Where the gross total income of an assessee includes any profits and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the duly audited report along with the return was held to be not mandatory. Be it noted, the provision under Section 32AB(5) of the Act is similar to Section 80-IA(7) of the Act. Therefore, we are unable to take any different view in the matter than the one arrived at by the Punjab and Haryana High Court in Punjab Financial Corporation (supra). In view of the above, the first point under issue No.(a) is held in affirmative. In other words, where the assessee files the audit report in Form No.10CCB before completion of the assessment, we do not find any reason to hold that the condition envisaged under Section 80-IA of the Act had not been fulfilled. 11. Analysing whether the said benefit is admissible in case of reassessment proceedings as well, it would be expedient to reproduce relevant portion of Sections 147 and 148 of the Act, which read, thus:- Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the assessee a notice requiring him to furnish a return of his income or income of any person in respect of which he is assessable during the previous year corresponding to the relevant assessment year even where a return had been furnished earlier under Section 139 or Section 142(1) of the Act, within such period as may be specified in the notice. The effect of return filed in response to notice under Section 148(1) of the Act is that it shall be treated as if such return was a return required to be furnished under Section 139 of the Act. Accordingly, the Assessing Officer shall serve a notice under Section 143(2) of the Act within the period of limitation provided thereunder from the end of the financial year in which the return is furnished by the assessee to make the assessment under Section 147 read with Section 143(3) of the Act. In view of the above, it may be safely concluded that the basic purpose of Section 148 of the Act is merely to empower the Assessing Authority with the machinery for assessment. Fundamentally, both the assessment and reassessment need the same machinery. In other words, the provisions relating to regular assessments shall apply to the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he new unit commenced its production during A.Y. 1997-98. The manufacturing of micronutrient fertilizers even has not been disputed by the Assessing Officer. It is not the case that the unit in dispute is part of earlier unit or its expansion. There is an uncontroverted finding in the impugned order that the assessee was maintaining separate accounts for both the units which are duly audited. Since the assessee has duly fulfilled the requirements of section 80-IA(7) of the Act by filing the audit report before framing the assessment, we are of the view that the Assessing Officer wrongly disallowed the claim of the assessee. As per provisions of section 80- IA(7), requiring filing of audit report alongwith the return is not mandatory rather it is directory and if the audit report is filed at any time before framing the assessment, the required conditions are considered to be fulfilled. Our view is fortified by the decision in CIT vs. ACE Multitaxes Systems (P) Ltd. (2009) 317 ITR 307 (Kar.); CIT vs. Medicaps Limited (2010) 323 ITR 554 (MP); AKS Alloys Pvt. Ltd. (2012); 18 Taxman.com 25(Mad.); CIT vs. A.N. Arunachalam; 75 Taxman 529 (Mad.). The sum and substance of these decisions is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and against the Revenue. 15. Now, taking up the second broad issue, as regards the argument of the learned counsel that deduction under Section 80-IA of the Act could not have been allowed in respect of Unit-II when the profit shown by it was erroneous as it was reflected from its sales and consumption of raw material which was disproportionate to the combined accounts of the Unit-I and Unit-II is concerned, it is gathered from the findings recorded by the CIT(A) that the products manufactured in Unit-I and Unit-II of the assessee are altogether different and therefore, percentage of raw material consumed in both the units and working out value of sale based on raw material consumed in Unit-II cannot be the same. Under these circumstances, the CIT(A) held that assessee was eligible for claiming deduction of ₹ 16,71,579/- under Section 80-IA of the Act on the profits derived from Unit-II. The relevant extract of the finding recorded by the CIT(A) is reproduced as under:- As regards profits derived from Unit-II of manufacturing of micronutrient fertilizers, the appellant had shown net profit of ₹ 96,67,206/- and the allowable deduction u/s 80-IA @30% works out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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