CIT Vs Web Commerce (India) Pvt. Ltd. (Delhi High Court)
Delhi High Court considered Revenue’s appeal involving interpretation of Section 10B(5) of the Income-tax Act, 1961. The Court noted that the provision was virtually identical to Section 80-IA(7), Section 80HHB(3)(ia) and the erstwhile Section 80J(6A). The controversy concerned whether furnishing the prescribed audit report along with the return of income was a mandatory requirement for obtaining the statutory deduction, or whether the requirement could be satisfied by furnishing the report subsequently but before completion of assessment.
Revenue contended that unless the audit report was filed along with the return, the assessee could not obtain the benefit of Section 10A. The High Court, however, observed that it had already interpreted similar statutory provisions and held the requirement regarding the time of furnishing the audit report to be directory rather than mandatory. Thus, failure to furnish the audit report along with the return did not, by itself, result in forfeiture of the deduction where the requisite report was furnished before the assessment was framed.
The High Court specifically relied upon its recent decision in CIT Vs Contimeters Electricals Private Limited, ITA 1366/2008, decided on 02.12.2008. In that case, while considering the identical requirement under Section 80-IA(7), the Court had held that the provision stood complied with so long as the audit report was filed before framing of the assessment. The requirement to furnish the report along with the return was therefore treated as directory and not mandatory.
Since the relevant provisions were materially identical, the High Court held that the same interpretation had to be adopted in the case of Web Commerce (India) Pvt. Ltd. Consequently, the Court found no fault with the conclusions reached by the Tribunal. It held that no substantial question of law arose for consideration and dismissed Revenue’s appeal.
The judgment thus establishes that, in the context of the provisions considered by the Court, the substantive benefit of deduction cannot be denied merely because the prescribed audit report was not furnished simultaneously with the return, provided that the report was furnished before completion of the assessment. The Court treated the timing requirement as directory rather than mandatory and declined to interfere with the Tribunal’s decision.
Cases Discussed
- CIT Vs Contimeters Electricals Private Limited, ITA 1366/2008, decided on 02.12.2008 (Delhi High Court) — Followed for the proposition that where the audit report is furnished before framing of the assessment, Section 80-IA(7) stands complied with and the requirement of furnishing the report along with the return is directory rather than mandatory.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. In the present appeal the appellant seeks to raise the question of interpretation with regard to the provisions of Section 10B (5) of the Income Tax Act, 1961 (hereinafter referred to as the ‘said Act’). The said provision is virtually identical to the provisions of Section 80IA (7) as also 80HHB (3) (ia). It is also identical to the erstwhile provisions of Section 80J(6A) of the said Act.
2. This Court has already interpreted the latter provisions and has held the same to be directory and not mandatory. The contention of the revenue was that unless and until the audit report is filed along with the return, the benefit of Section 10A cannot be available to the assessee. Recently, we have considered the identical provisions of Section 80IA (7) in the case of CIT v. Contimeters Electricals Private Limited: ITA 1366/2008 decided on 02.12.2008 and held that as long as the audit report is filed before the framing of the assessment, the provisions of Section 80IA (7) would be complied with inasmuch as the same are directory and not mandatory. A similar view would have to be taken in the present case also inasmuch as the provisions are the same. Consequently, we do not find any fault with the conclusions arrived at by the Tribunal. No substantial question of law arises for our consideration.
The appeal is dismissed.
