TMI Blog1996 (3) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit of Rs. 1,36,000 with IDBI and claimed deduction under s. 32AB. The assessee, however, failed to file a copy of the audit report along with the return filed as required in sub-s. (5) of s. 32AB. The assessee consequently filed a revised return showing income as disclosed in the original return but annexing therewith auditor's report in the prescribed form. Since the requisite audit report was not filed along with the return originally filed the AO rejected the claim of the assessee following the decision of the Hon'ble Punjab Haryana High Court in the case of CIT vs. Jaydeep Industries (1989) 180 ITR 81 (P H) wherein the Hon'ble High Court held the view that the requirement of filing of audit report along with the return of income as required under s. 80J(6A) is mandatory as the provision clearly lays down the deduction claimed shall not be admissible unless the assessee also furnishes alongwith the return the audit report in the prescribed form duly signed and verified by the accountant. 3. On appeal it was claimed that the assessee filed the requisite audit report with the revised return when came to know that the same was not filed with the original return. It was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 825 (Cal) 9. CIT vs. Hardeodas Agarwalla Trust (1992) 198 ITR 511 (Cal) 10. CIT vs. Gujarat Oil Allied Industries (1993) 109 CTR (Guj) 272 : (1993) 201 ITR 325 (Guj) It has further been submitted that the Hon'ble Supreme Court in the case of CIT vs. Nanjibhai Dungarbhai (1989) 179 ITR (St) 61 rejected the SLP against the order of the Hon'ble Gujarat High Court declining to call for a reference on the question whether the Tribunal correctly directed exemption under s. 11 to the trust and the auditor's report in Form No. 10B as required by s. 12A(b) was not filed with the return of income. It is also submitted that the provisions of s. 12A(b) with regard to the filing of audit report along with the return has been held directory in the case of Trustees of Virji Peraj Trust vs. ITO (1984) 19 TTJ (Bom) 538 : (1984) 8 ITD 890 (Bom) and Calcutta Management Association vs. ITO (1992) 42 ITD 62 (Cal). It has also been pointed out that provisions of s. 80J(6A) has also been held directory in the following cases: 1. Laxmi Rice Mills vs. ITO (1982) 2 ITD 39 (Del) 2. Mahalaxmi Rice Factory vs. ITO (1984) 18 TTJ (Chd) 553 : (1983) 5 ITD 238 (Chd) 3. ITO vs. Vijaydurga Offse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower authorities were justified in rejecting the claim. 5. We have carefully considered the facts and rival submissions. We have also gone through the relevant provisions of the Act and the case laws cited. For claiming the deduction under s. 32AB(1) for the deposit made with the IDBI the assessee was required to have its books of accounts audited and also to furnish a copy of the audit report in the prescribed form along with the return as per sub-s. (5) of s. 32AB. For proper appreciation we reproduce hereunder sub-s. (5) of s. 32AB: "The deduction under sub-s. (1) shall not be admissible unless the accounts of the business or profession of the assessee for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant as defined in the Expln. below sub-s. (2) of s. 288 and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant." It would be seen from the above provisions that to claim the said deduction the assessee is required to satisfy the following two conditions: 1. The books of accounts maintained are to be audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atory whereas filing of audit report along with the return is directory. The Hon'ble Gujarat High Court also interpreted the word 'shall' as employed by the legislature in sub-s. (6A) of s. 80J to be read as 'may'. The headnotes of the judgment of the Hon'ble Gujarat High Court are extracted hereunder: "Sec. 80J of the IT Act, 1961, gives special deductions to new industrial undertakings and hotels, provided the conditions laid down therein are fulfilled. The benefit will be subject to the provisions of sub-s. (6A) of s. 80J. The first part of sub-s. (6A) lays down that the deductions under sub-s. (1) from profits and gains shall not be admissible unless the accounts for the previous year relevant to the assessment year for which deduction is claimed have been audited by an accountant. The first part of s. 80J is mandatory in nature but the second part thereof which is procedural in nature and requires the assessee to submit the report of the audit along with the return is merely directory in nature and it calls for only substantial compliance. The reasons are obvious. It is possible that at the time when the return of income is filed, by some mischance or negligence of the cler ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J(1) and would result in absurdity, the other view by which the beneficial provision of s. 80J(1) is made fully operative should be preferred. Hence, the word 'shall' as employed by the legislature in sub-s. (6A) of s. 80J(1) will have to be read as 'may'." While holding so the Hon'ble Gujarat High Court dissented from the decision of the Hon'ble Punjab Haryana High Court in the case of Jaydeep Industries. Similar view had been held earlier by the Tribunal in respect of deduction under s. 80J in the case of Laxmi Rice Mills vs. ITO and Mahalaxmi Rice Factory vs. ITO. 5.1 It is mentioned in this regard that sub-s. (5) of s. 32AB is pari materia with sub-s. (6A) of s. 80J. The ratio of decision of the Hon'ble Gujarat High Court is, therefore, applicable to the claim made in the present case under s. 32AB. 5.2 We also find that the Tribunal on similar facts allowed deduction under s. 32AB in its orders in the cases of Amber Electrical Conductors P. Ltd. vs. Asstt. CIT and Nemo Enterprises vs. Asstt. CIT where copy of the audit report was not filed along with the return but the same were filed with the application made under s. 154. 5.3 We also note that the Tribunal in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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