In Fortuna Foundation Engineers & Consultants Pvt.Ltd v. CIT, the division bench of the Allahabad High Court held that the provisions of Rule 18BBB of the Income Tax Rules mandating filing of Audit Report along with the Return is merely directory.
While upholding the order of the ITAT, the division bench comprising of Justice Sudhir Agarwal and Justice Attau Rahman Masoodi, clarified that the assessee is eligible for exemption under section 80IB(10) of the Income Tax Act if the report has been filed before the completion of assessment.
Assessee, in the instant case- engaged in construction business, had claimed exemption under section 80IB(10) of the Income Tax Act. The Assessing Officer rejected the claim mainly on ground that Audit Report under Rule 18BBB was not filed along with the Return. Both the first appellate authority and the ITAT held in favour of the assessee.
The bench noted that the assessee had filed the audit report during the course of pre-assessment proceedings.
According to the Revenue, non-filing of the report along with return and filing the same before assessment, will amount to non-compliance of Section 80IB (13) read with Section 80IA (7) of the Income Tax Act.
Based on the decisions of the Delhi and Madras High Court and the Apex Court decision in Commissioner of Income Tax Vs. G.M. Knitting Industries (P) Ltd, the bench clarified that it is not mandatory and only directory and Assessee cannot be made to suffer if it filed audit report in form 10CCB in the course of assessment proceedings and not along with return.
Read the Full text of the Judgment below.
