Mitalkumari Avinashkumar Gajera Vs ITO (ITAT Surat)
Belated filing of Form 56F does not justify denial of Section 10AA deduction when the form is furnished before processing under Section 143(1); ITAT Surat also holds that the return-filing condition introduced by Finance Act, 2023 applies prospectively from AY 2024-25.
Case Summary The ITAT Surat considered whether deduction under Section 10AA could be denied for AY 2019-20 because Form 56F was filed after the return of income and the return itself was furnished beyond the due date under Section 139(1). The assessee had filed Form 56F on 16.06.2020, before the intimation under Section 143(1) was issued on 14.07.2020. The Tribunal held that furnishing Form 56F is mandatory, but the prescribed time limit is directory and delayed filing is a procedural lapse that cannot defeat substantive entitlement where the deduction is otherwise established. It further held that the requirement of filing the return within the due date under Section 139(1), introduced by the Finance Act, 2023, applies prospectively from AY 2024-25 and cannot be applied to AY 2019-20. The Assessing Officer was directed to allow the deduction after necessary verification of Form 56F.
Citation Mitalkumari Avinashkumar Gajera v. Income Tax Officer, Ward 3(3)(1), Surat, ITA No. 297/SRT/2026, ITAT Surat, dated 03.11.2026.
Core Issue Whether deduction under Section 10AA can be denied for AY 2019-20 on account of delayed furnishing of Form 56F after filing the return but before issuance of intimation under Section 143(1), and filing of the return beyond the due date prescribed under Section 139(1).
Fact The assessee filed the return of income for AY 2019-20 on 30.05.2020, claiming deduction under Section 10AA in respect of a unit registered in Surat Special Economic Zone. The due date for filing the return under Section 139(1) was 31.10.2019. The assessee had not furnished Form 56F along with the return. The CPC proposed adjustment under Section 143(1)(a), citing non-furnishing of the relevant schedule and Form 56F within the prescribed time and delayed filing of the return. In response, the assessee furnished Form 56F on 16.06.2020. However, the CPC issued intimation under Section 143(1) on 14.07.2020, disallowing the deduction. The assessee’s rectification application under Section 154 was rejected on 24.08.2020, and the CIT(A) also dismissed the appeal.
AO / CIT(A) Finding The CPC disallowed the deduction under Section 10AA on two grounds: Form 56F had not been furnished within the prescribed time, and the return of income had been filed beyond the due date under Section 139(1). The CIT(A) upheld the disallowance, observing that the assessee should seek condonation of delay under Section 119(2)(b) from the CIT (Exemptions).
ITAT Finding
Delayed filing of Form 56F: The Tribunal noted that the return was filed on 30.05.2020, Form 56F was furnished on 16.06.2020, and the intimation under Section 143(1) was issued thereafter on 14.07.2020. The entitlement to deduction on merits had not been disputed by the lower authorities. Following the decisions relied upon by the assessee, the Tribunal held that furnishing Form 56F is mandatory, but the time limit for furnishing it is directory. The delay was a procedural lapse and could not defeat the substantive deduction where the required form had been furnished before processing of the return.
The Tribunal also relied on the Gujarat High Court decision in Association of Indian Panelboard Manufacturer v. DCIT, which held that an application under Section 119(2)(b) for condonation of delay is an additional remedy and not a compulsory prerequisite for pursuing appellate relief.
Belated filing of return: The Tribunal further held that the condition requiring filing of the return within the due date under Section 139(1) for claiming deduction under Section 10AA was introduced by the Finance Act, 2023, with effect from AY 2024-25. The amendment operates prospectively and cannot be applied to AY 2019-20. Therefore, the belated filing of the return was not a valid ground for denying the deduction for the year under consideration.
Accordingly, neither delayed filing of Form 56F nor belated filing of the return justified disallowance of the Section 10AA deduction.
Outcome The assessee’s appeal was allowed for statistical purposes. The Assessing Officer was directed to allow the deduction under Section 10AA in accordance with law after necessary verification of Form 56F. The deduction could not be denied either for delayed furnishing of Form 56F or for filing the return beyond the due date under Section 139(1), since the restrictive return-filing condition was applicable only prospectively from AY 2024-25.
Cases Discussed
1. PCIT v. Astrotech Steels Private Limited (Madras High Court); (2025) 175 taxmann.com 285.
The Madras High Court considered denial of deduction under Section 10AA due to delayed furnishing of Form No. 56F. The decision supported the proposition that although the prescribed accountant’s report is necessary for claiming the deduction, a delay in furnishing the report is procedural and need not defeat substantive eligibility. The assessee relied upon this authority, and the ITAT Surat accepted the legal principle while deciding the first issue.
2. Nachiket Dipak Shah Vs ITO (ITAT Ahmedabad); ITA No. 1330/Ahd/2024; 13/12/2024.
The Ahmedabad Tribunal considered a claim for deduction under Section 10AA where Form No. 56F had been furnished after the prescribed filing date but before processing of the return. The decision treated the delayed report as a procedural defect rather than an automatic bar to deduction. The ITAT Surat referred to this precedent in support of allowing the assessee’s claim notwithstanding delayed furnishing of Form No. 56F.
The Gujarat High Court held that recourse to Section 119(2)(b) for condonation of delay is an additional remedy and does not displace the assessee’s statutory appellate remedy. The ITAT Surat relied on this decision to reject the CIT(A)’s conclusion that the assessee was required to approach the Commissioner of Income Tax (Exemptions) for condonation of delay instead of obtaining relief in appellate proceedings.
4. DCIT Vs MD Equipment Pvt. Ltd. (ITAT Delhi); ITA No. 3523/Del/2025; 05/01/2026.
The Delhi Tribunal considered the statutory requirements for deduction under Section 10AA, including return-filing restrictions. The ITAT Surat relied upon this decision for the proposition that the restrictive due-date condition inserted by the Finance Act, 2023 applies prospectively from AY 2024-25 and could not justify denial of deduction for AY 2019-20.
The Bangalore Tribunal held that delayed filing of Form No. 56F was a procedural lapse that did not automatically extinguish an otherwise eligible deduction under Section 10AA. The ITAT Surat referred to this decision while holding that the time limit for furnishing the statutory form is directory, notwithstanding the mandatory nature of furnishing the form itself.
FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER
Feeling aggrieved by order of first appeal dated 19.12.2025 passed by learned Addl/JCIT(A)-1, Bengaluru [“Ld. CIT(A)”], which in turn arises out of the rectification-order dated 24.08.2020 passed by learned Assistant Director of Income-Tax, Centralized Processing Centre, Bengaluru [“Ld. AO”] u/s 154 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2019-20, the assessee has filed this appeal.
2. The background facts leading to present appeal are such that the assessee-individual filed return of income for AY 2019-20 on 30.05.2020 claiming deduction u/s 10AA. The Ld. AO, vide communication dated 09.06.2020, proposed adjustment u/s 143(1)(a) to disallow the deduction on these grounds, namely (i) the deduction u/s 10AA was claimed but the corresponding Schedule in ITR and Form No. 56F were not filed within due date and (ii) the return of income was furnished on 30.05.2020 beyond the due date of 31.10.2019 specified u/s 139(1). In response, the assessee filed Form No. 56F on 16.06.2020. However, the Ld. AO issued intimation u/s 143(1) dated 14.07.2020 disallowing the deduction. Against this intimation, the assessee filed rectification request dated 27.07.2020 u/s 154 which was also rejected by Ld. AO vide rectification-order dated 24.08.2020. Aggrieved, the assessee carried matter in first-appeal. The Ld. CIT(A) dismissed the appeal. Still aggrieved, the assessee has come in present appeal before us.
3. The assessee has raised following effective grounds:
“1. On the facts and circumstances of the case as well as the law on subject, the learned CIT(A) erred in confirming the action of Ld. assessing officer (CPC) in disallowing the deduction u/s 10AA of the Act.”
“2. It is therefore prayed that the above disallowance made by Ld. Assessing Officer (CPC) and confirmed by learned CIT(A) may please be deleted.”
4. The controversy between the parties, therefore, lies in a narrow compass and is two-fold:
(i) The first issue is whether the deduction can be denied because Form No. 56F was not filed in time, i.e., it was furnished on 16.06.2020, after the return of income but before the intimation u/s 143(1)?
(ii) The second issue is whether the deduction can be denied because the return of income was not furnished by the due date specified u/s 139(1)?
5. At first, we re-produce below the relevant portion of the adjudication made by Ld. CIT(A):
“5.2.2 The contention of the Appellant and the case laws relied upon are considered. It is evident that the Appellant has filed the Form 56F on 16.06.2020 after filing the ITR on 30.05.2020. The relevant excerpt of the same is reproduced hereinunder:
XXX (Form No. 56F)
5.2.3 Further, reference is made to the Rule No. 16D of the Income-tax Rules, 1968 wherein the manner of opting for exemption u/s 10A/10AA is provided. The relevant excerpt of the same is reproduced hereinunder:
“16D. The report of an accountant which is required to be furnished by the assessee, under sub-section (8) of section 10AA, read with sub-section (5) of section 10A shall be in Form No. 56F”.
5.2.4 Thus, it is evident that the Appellant has filed the Form 56F after the extended due date of filing the ITR i.e., 30.09.2019 as per the provisions of section 139(1) of the Act. It is the duty of the appellant to follow the rule and procedure that is prescribed in the Income Tax Act and Income Tax Rules. The appellant has requested the appellate authority to condone the filing of Form 56F belatedly. However, the condonation u/s 119(2)(b) is to be condoned only by CIT(Exemption).
Thus, the appellant shall file the application of condonation before the concerned CIT (Exemptions) for condonation of delay u/s 119(2)(b) of the Act.
6. In the result, appeal is treated as dismissed.”
6. During hearing before us, the Ld. AR for assessee made following submissions:
(i) As regards the first reason, i.e., Form No. 56F not having been filed in time, Ld. AR filed a screenshot of the income-tax portal showing that Form No. 56F was filed on 16.06.2020 which is before the intimation u/s 143(1) dated 14.07.2020 was issued. Ld. AR submitted that this is not a case of non-furnishing of Form No. 56F; that the entitlement of assessee to the deduction was never questioned on merits; and that the delay, if any, is a technical default which cannot result in denial of deduction. In support, Ld. AR relied upon these decisions, namely:
(a) Hon’ble High Court of Madras – Principal Commissioner of Income-tax Vs. Astrotech Steels (P) Ltd. (2025) 175 taxmann.com 285 (Madras),
(b) ITAT, Ahmedabad – Nachiket Dipak Shah Vs. The Income-tax Officer, Ward-5(3)(2), ITA No. 1330/Ahd/2024, order dated 13.12.2024,
(c) ITAT, Bangalore – M/s Graymatter Software Services Private Limited Vs. The Deputy Commissioner of Income-tax, ITA No. 2594/Bang/2025, order dated 27.04.2026.
(ii) As regards the second reason, i.e., the return of income not having been filed by the due date, Ld. AR submitted that the restrictive provision in section 10AA(1) was introduced by Finance Act, 2023 w.e.f. 01.04.2024 and, hence, it applies from AY 2024-25 and not to the AY 2019-20 under consideration. In support, Ld. AR relied upon the decision of ITAT, Delhi in ITA No. 3523/Del/2025, DCIT, Circle 16(1) Vs. MD Equipment Pvt. Ltd., order dated 05.01.2026.
7. With above submissions, Ld. AR contended that the disallowance of deduction u/s 10AA is unsustainable and prayed that the same be deleted.
8. Per contra, Ld. DR for revenue relied upon Para 5.2.4 of the order of Ld. CIT(A), re-produced above, and submitted that the order of Ld. CIT(A) be upheld.
9. We have heard rival submissions of both sides and perused the orders of the lower authorities as well as the material on record to which our attention has been drawn.
10. We first take up the first issue, i.e., the timing of Form No. 56F. The undisputed facts of the case are: The return of income was filed on 30.05.2020; the Form No. 56F was furnished on 16.06.2020; and the intimation u/s 143(1) was issued later on 14.07.2020. The Form No. 56F, as reproduced in the first-appeal order, certifies the deduction u/s 10AA for AY 2019-20 in respect of the assessee’s unit registered in Surat Special Economic Zone. The entitlement of assessee to the deduction has not been doubted on merits by the lower authorities. We find that the decisions cited by Ld. AR, narrated in earlier para 6(i), support the case of assessee. It has been held therein that the filing of Form No. 56F is mandatory to avail the deduction but the time limit is directory. Further, the delayed filing is a mere procedural lapse for which the substantive benefit available to assessee cannot be denied.
11. In so far as the contention of Ld. DR supporting the Para 5.2.4 of Ld. CIT(A)’s order is concerned, the Ld. CIT(A) has therein observed that the power to condone delay in filing Form No. 56F is vested in the CIT(Exemption) only u/s 119 and not in appellate authorities. However, this contention does not hold good in the light of decision of Hon’ble Jurisdictional High Court in Tax Appeal No. 655 of 2022, Association of Indian Panelboard Manufacturer Vs. The Deputy Commissioner of Income-tax, Judgement & Order dated 21.03.2023, wherein it was held so:
“5.6 The tribunal further committed an error in appreciating the import of Section 119(2)(b) of the Act in as much as the application contemplated thereunder is only additional remedy for the assessee which could not be said to be compulsorily resorted to by the assessee. The circular No. 7/18 dated 20.12.2018 issued under Section 119 of the Act could not be, therefore said to have taken away the appellate remedy.”
12. Therefore, the first issue is decided in favour of assessee.
13. Coming to the second issue, the adjustment proposed by Ld. AO (CPC) also rests on the return of income having been furnished on 30.05.2020, beyond the due date of 31.10.2019 specified u/s 139(1). However, the restrictive requirement of filing return by due date u/s 139(1) for availing the benefit of section 10AA has been introduced in sub-section (1) of section 10AA from AY 2024-25 which has prospective application and does not apply to AY 2019-20 under consideration. This proposition is directly supported by decision of ITAT, Delhi in ITA No. 3523/Del/2025, MD Equipment Pvt. Ltd. (supra) relied by Ld. AR.
14. Therefore, the second issue is also decided in favour of assessee.
15. Accordingly, we hold that the deduction claimed u/s 10AA could not have been disallowed on either of the two reasons and direct the Ld. AO to allow the same in accordance with law after necessary verification of Form No. 56F filed by assessee.
16. Resultantly, this appeal of assessee is allowed for statistical purposes.
Order pronounced in open court on 03/11/2026.
