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Judgment
PER KRINWANT SAHAY AM
Appeal in this case has been filed by the Assessee against the order dated 23.01.2026 passed by the Ld. ADDL/JCIT (A)-6, Mumbai for the A.Y. 2023-24. Grounds of appeal are as under :-
“1.That under the facts and circumstances of the case, the impugned order dated 23.01.2026 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), dismissing the grounds of appeal and sustaining the assessed income at Rs. 3,08,65,530/-in place of the returned income of Rs. 2,88,36,500/-filed by the assessee, is bad in law on account of several grounds and assessee/appellant denies its liability to be assessed for any income other than the income already returned by the assessee and the consequential demand of Rs.6,83,280/-.
2.That under the facts and circumstances of the case, the Ld. CIT(A) has erred in law as much as in facts, as the Ld. CIT(A) has uphold the action of CPC in disallowing the deduction claimed under section 80JJAA of the Act, without properly appreciating the facts, and submissions placed on record by the appellant.
3.That under the facts and circumstances of the case, the CPC has erred in law as much as in facts in disallowance of deduction claimed by the appellant u/s 80JJAA of the Act, and the Ld. CIT(A) also erred in sustaining such disallowance.
4.That under the facts and circumstances of the case, the Ld. CIT(A) has erred in law as much as in facts, upon sustaining the disallowance made merely on the basis of delay in filing Form 10DA, without appreciating the fact that it was already available before the CPC at the time of scrutiny u/s 143(1) of the Act.
5.That the appellant craves to leave, add, alter, amend, modify or withdraw any of the above grounds of appeal before or during the hearing of appeal.
6.That each ground is independent and without prejudice to each other.”
At the very outset the Ld. Counsel for the assessee submitted before the Bench that the CPC Bangalore disallowed the deduction claimed u/s.80JJAA of the Act for the simple reason that the tax audit report was belatedly filed. There was a delay of 21 days in filing of the tax audit report in Form 10DA. The Ld. Counsel further has filed synopsis on this issue which is reproduced as under :-
6.That, although being a delay in filing, the said form was duly filed before the filing of ITR viz. on 26.10.2023 and significantly before the issuance of intimation order u/s 143(1) of the Act passed on 07.06.2024.
7.It is also to be noted that the Tax audit report was furnished before the due date of furnishing the audit report and the claim of deduction amounting to Rs. 41,83,012/- under section 80JJAA was explicitly disclosed in clause-33 of Form No. 3CD of the Tax Audit Report. This underscores the fact that the claim was quantified and verified before the due date, proving the appellant's bona fide intent.
8.it is also to be submitted that as the subject form was filed on 21.10.2023 and the impugned intimation order u/s 143(1) of the Act has been passed by CPC on 07.06.2024, thus it implies that at the time of passing the intimation order the subject form was already available for the perusal and verification and the same could have been considered for allowing the deduction claimed by the appellant.
9.The reliance might be placed upon the following case laws, wherein the Hon'ble ITAT Delhi has also ruled out that filing of audit report in any particular form is only a directive in nature and merely because of above such failure, the assessee cannot be denied the deduction claimed, because of such technical error:
a. ACIT vs Colossus Tex Pvt. Ltd. [ITA/8885/Del/2025] [25.03.2026]
b. Jubilant Foodworks Limited vs. ACIT, Income Tax Circle 5(1), Noida [ITA No. 184/Del/2025] [06.08.2025]
c. IIFL Samasta Finance Ltd. vs. Deputy Commissioner of Income -tax [2025] 176 taxmann.com 278 (Bangalore - Trib.) [26-06-2025]
10.The reliance placed by the Department on CIT v. Wipro Limited is misplaced and distinguishable on facts as well as in law. Vide, the subject judgement of Wipro Ltd., the Hon'ble Apex Court has itself distinguished the scenario from the judgement of GM Knitting Industries Pvt. Ltd., by ruling out that if any income is to be treated as per the provisions of Chapter-III of the IT Act, which deals with the exemptions, then it is mandatory to strictly and literally comply with the exemption provisions and none of the decisions which are relied upon on interpretation of Chapter-VIA shall be applicable while considering the exempted income.
"[Para 11] Now, so far as the reliance placed upon the decision of this Court in the case of G.M. Knitting Industries (P.) Ltd. (supra), relied upon by the learned counsel appearing on behalf of the assessee, is concerned, section 10B (8) is an exemption provision which cannot be compared with claiming an additional depreciation under section 32(1) (ii-a) of the Act. As per the settled position of law, an assessee claiming exemption has to strictly and literally comply with the exemption provisions. Therefore, the said decision shall not be applicable to the facts of the case on hand, while considering the exemption provisions. Even otherwise, Chapter III and Chapter VIA of the Act operate in different realms and principles of Chapter III, which deals with "incomes which do not form a part of total income", cannot be equated with mechanism provided for deductions in Chapter VIA, which deals with "deductions to be made in computing total income". Therefore, none of the decisions which are relied upon on behalf of the assessee on interpretation of Chapter VIA shall be applicable while considering the claim under section 10B(8) of the IT Act."
11.That the Hon'ble Delhi High Court, in the case of Bhawani Power Projects has also distinguished the judgement of Wipro Ltd. and GM Knitting Industries, on the basis of same observations. The relevant portion is reproduced hereunder:
"[Para 31]. One of the reasons which appears to have weighed upon the Supreme Court while rendering its decision in Wipro Limited (supra) was of Section 10B being an exemption provision. This is evident from the Supreme Court significantly observing that Section 10B(8) being an exemption provision not being liable to be compared with Section 32(1)(ii-a) and which was concerned with a claim for additional depreciation. Regardless must also be had to the fact that Section 10B(1) is essentially concerned with the grant of exemptions to newly established hundred per cent export-oriented undertakings and the deduction of profits and gains derived by such an enterprise. Sub-section (8) thereof enables an assessee to opt out of the exemption provisions contained therein
Per contra the Ld. DR relied on the order of the Ld. CIT(A).
We have considered the findings given by the Ld. CIT(A) in the appellate order and the submissions filed by the Ld. Counsel for the assessee and his arguments made before us. It is obvious from the submission filed by the Ld. Counsel for the assessee that the report in Form 10DA was filed on 20.01.2023 and the CPC processed the return on 07.07.2024. Thus it is clear that on the date of the processing of return by the CPC u/s.143(1) of the Act report in Form – 10DA was already available to the CPC on the date. There are various judicial pronouncements given by the co-ordinate Benches of ITAT on this issue which clearly show that once the report in Form 10DA is filed before the processing of return. There is no reason to disallow the deduction claimed by the assessee. Accordingly, here in this case the deduction claimed u/s.80JJA of the Act by the assessee is allowable. Accordingly, assessee’s appeal on this issue is allowed.
In the result, the appeal of the assessee is allowed.