True Sparrow Systems Private Limited Vs DCIT (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, partly allowed the assessee’s appeal for Assessment Year 2014-15 and allowed the appeal for Assessment Year 2015-16, holding that filing the incorrect audit form by the Chartered Accountant was a procedural lapse that could be rectified and should not, by itself, defeat an otherwise eligible claim for deduction under Section 10AA of the Income Tax Act.
The assessee, a private limited company engaged in providing information technology services and software-related services outside India, had obtained approval from the Special Economic Zone (SEEPZ) on 19 January 2011, making it eligible to claim deduction under Section 10AA. For AY 2014-15, the assessee filed its return declaring total income of ₹8,34,871 after claiming a deduction of ₹6,10,66,460 under Section 10AA. During the original scrutiny assessment under Section 143(3), the Assessing Officer (AO) examined the claim, verified the relevant details, and accepted the return without any addition. Subsequently, the assessment was reopened under Sections 148A(d) and 148, following which the AO disallowed the deduction on the ground that the assessee had filed Form 56G instead of Form 56F, treating compliance with Form 56F as mandatory and adding ₹6,10,66,460 to the business income. The Commissioner of Income Tax (Appeals) upheld the disallowance.
