ITAT Delhi Holds Delay in Filing of Audit Report as Procedural; Allows Tax Exemption Under Section 80IAC

Introduction

The Hon’ble Income Tax Appellate Tribunal, Delhi Bench (“ITAT”) in the case of FIVD India Consulting Pvt. Ltd. vs. Deputy Commissioner of Income Tax[1] has held that while filing of an audit report in the prescribed format is mandatory for claiming deduction under Section 80-IAC of the Income Tax Act, 1961, the timeline for filing such audit report is merely procedural in nature.

The Tribunal clarified that when an assessee furnishes the audit report before completion of assessment, tax authorities cannot deny the deduction solely on account of delay in electronic filing.

The ruling reinforces the settled legal principle that procedural lapses cannot defeat substantive statutory benefits, particularly in incentive provisions enacted to promote start-ups and eligible businesses.

Facts

• The Assessee and the appellant in this case was FIVD India Consulting Private Limited. It was engaged in the business of interior design, architectural advisory and management consulting services.
• For Assessment Year 2023-24, the assessee filed its return of income on 30 November 2023, claiming deduction under Section 80-IAC amounting to INR 18.57 crore.
• AY 2023-24 was the first year in which the assessee claimed deduction under Section 80-IAC.
• The assessee’s accounts were duly audited and the audit report in Form 10CCB was signed on 31.10.2023, i.e., on or before the specified date under Section 44AB.
• Due to a technical issue, Form 10CCB could not be uploaded by the due date and was ultimately filed on 13.12.2023, prior to completion of assessment.
• CPC processed the return under Section 143(1) and denied the Section 80-IAC deduction solely because the assessee filed Form 10CCB after the specified date under Section 44AB.
• The Assessee appealed before the CIT(A) and they denied the same treating timely filing of Form 10CCB as a mandatory statutory requirement for claiming the benefit of section 80IAC.

Judgements referred

• Hon’ble Apex Court in the case of CIT vs. GM Knitting Industries Pvt. Ltd.²
• Hon’ble Delhi High Court in the case of CIT vs. Contimeters Electrical Pvt. Ltd.³
• Hon’ble ITAT, Delhi Bench in the case of Sanjay Kukreja vs. ACIT⁴
• Hon’ble Punjab and Haryana High Court in the case of CIT vs. Gupta Fabs
• Hon’ble ITAT, Pune Bench in the case of Desai Infra Projects (I) Pvt. Ltd. vs. CIT
• Hon’ble Apex Court in the case of CIT vs. Alom Extrusion Ltd.
• Hon’ble Apex Court in the case of CIT vs. Vatika Township Pvt. Ltd.
• Hon’ble Apex Court in the case of Kollam District Co-operative Bank vs. CIT

Assessee’s Contention

• The Assessee appealed against the order passed by the ld. DCIT(A), Gurgaon, dated 04.04.2025 for the assessment year 2023-2024.
• The Assessee disputed that denial of Section 80IAC deduction for AY 2023-24, noting that CPC rejected the claim under Section 143(1) solely because Form 10CCB was not filed by the due date, even though it was uploaded on 13.12.2023 before processing was completed.
• The Assessee submits that this was the first year of claiming the deduction. The audit was completed and Form 10CCB was ready on 31.10.2023, but a technical issue delayed upload. Since the form was furnished before completion of assessment, the statutory requirement was met.
• The Assessee maintained that filing Form 10CCB is a procedural condition and that a belated upload does not invalidate an otherwise eligible deduction.
• The Assessee placed reliance on aforementioned decisions supporting acceptance of audit reports filed after the return but before completion of assessment.

AO’s Contention

• The AO contended that the Finance Act, 2020 amendment to Section 80-IA(7) mandates filing of the audit report before the specified date under Section 44AB.
• The AO asserted that for Assessment Year 2023-24, the assessee had to furnish Form 10CCB on or before 31.10.2023.
• The AO argued that failure to comply with the amended timeline disentitled the assessee from claiming deduction.
• The AO maintained that the amendment made the filing timeline a substantive requirement for claiming deduction under section 80 IAC.

Issues raised before the ITAT

1. Whether an assessee remains entitled to claim deduction under Section 80-IAC when it files Form 10CCB after the specified date under Section 44AB but before completion of assessment?
   1. Whether delay in filing Form 10CCB amounts to a procedural irregularity or constitutes a substantive default disentitling the assessee from the deduction?

Decision of the ITAT

1. Whether an assessee remains entitled to claim deduction under Section 80-IAC when it files Form 10CCB after the specified date under Section 44AB but before completion of assessment?
2. The ITAT held that the assessee remains entitled to deduction under Section 80-IAC, because filing of Form 10CCB constitutes a procedural requirement, and the assessee filed the audit report before completion of assessment.
3. Therefore, the ITAT concluded that that delayed uploading of the audit report does not invalidate the deduction when the assessee has otherwise fulfilled all statutory conditions and completed the audit within the prescribed time.
   1. Whether delay in filing Form 10CCB amounts to a procedural irregularity or constitutes a substantive default disentitling the assessee from the deduction?
4. The ITAT held that the delay does not constitute a substantive default and clarified that the Finance Act, 2020 amendment to Section 80-IA(7) did not convert the filing timeline into a substantive precondition.
5. The ITAT ruled that the timeline retains its procedural character, and therefore the assessee’s deduction cannot be denied solely due to delayed filing.
6. The ITAT directed the AO to verify assessee’s eligibility and quantify the deduction under section 80 IAC and allow assessee’s claim if it is eligible in terms of provisions of the Income Tax Act.

Conclusion

The ITAT Delhi ruling reaffirms that procedural delays cannot defeat substantive tax incentives, particularly under provisions such as Section 80-IAC aimed at encouraging start-ups.

The decision provides clarity that tax authorities must evaluate such deductions on merits rather than deny them on technical grounds, thereby strengthening certainty and taxpayer confidence in incentive-based provisions.

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[1] FIVD India Consulting Pvt. Ltd. [TS-1602-ITAT-2025(DEL)]

² GM Knitting Industries P. Limited [TS-477-SC-2015]

³ CIT vs. Contimeters Electrical P Ltd., 317 ITR 249 (Delhi)

⁴ Sanjay Kukreja vs. ACIT, in ITA No. 652/Del/2023