Deduction u/s 80JJAA cannot be denied due to minor technical defect in CA Certificate: ITAT

Brief facts relating to this issue are that assessee claimed deduction u/s. 80JJAA of the Act and furnished certificate of the Chartered Accountant on Form No. 10DA along with annexure. Ld. AO on perusal of the annexure observed that two columns no. 11 and 12 have been inserted in the said annexure but these columns are not there in the form 10DA appearing the I. T. Rules, 1962. Based on this observation, without pointing out any error in the quantum of deduction, Ld. AO only allowed the claim for 30% of the additional wages paid during the year but did not allow the claim of eligible deduction for previous assessment years. The assessee challenged the said action by the Ao but failed to get any relief from the Ld. CIT(A). Aggrieved, assessee is in appeal before this Tribunal.

Ld. Counsel for the assessee submitted that the assessee is regularly claiming deduction u/s. 80JJAA of the Act from AY 2011-12 onwards and the claim has been allowed for AYs 2011-12 and 2012-13 by the revenue authorities. Though the Ld. AO has allowed the claim of 30% of additional wages for the respective years but disallowed the claim just for a technical reason which actually arose because the Chartered Accountant who prepared the said return wanted to clarify the year wise quantum of deduction and, therefore, such disallowance by the AO is untenable.

On the other hand, ld. DR supported the finding of the AO.

ITA Observed that the quantum of deduction u/s. 80JJAA of the Act is in dispute. Section 80JJAA of the Act refers to deduction in respect of employment of new employees and prior to the amendment made w.e.f. 01.04.2017 as per sub-section(1) of section 80JJAA of the Act where the gross total income of an assessee includes any profits and gains derived from the manufacture of goods in a factory, there shall, subject to the conditions specified in sub-section (2), be allowed a deduction of an amount equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant in the previous year in which such employment is provided.

On perusal of the assessment order, ITAT noted that for the alleged defect of inserting columns 11 and 12 in the annexure to Form 10DA, Ld. AO restricted the deduction u/s. 80JJAA of the Act only to the extent of 30% of the additional wages paid for the particular year i.e. for AY 2013- 14 at Rs.48,62,275/- and for AY 2014-15 at Rs.1,05,87,286/-. We fail to find any merit in the said findings of the Ld. AO because he has partly accepted the claim of deduction but the deduction which has been claimed for AY 2011-12 and 2012-13 and stands allowed by the revenue in the past and the assessee was eligible for such deduction for subsequent two assessment years as per the provisions section 80JJAA of the Act. In case the AO has denied the total deduction u/s. 80JJAA of the Act for incorrect report furnished by the assessee then situation may have been different but in the instant case on the basis of the said report part of the claim has been allowed and part of the claim has been denied which in our considered opinion was not correct on the part of lower authorities.

Therefore, under the given facts and circumstances of the case, ITAT is of the considered view that for such minor technical defect, which in real sense is not defect since the said audit report has given more clarity to the year wise deduction claimed u/s. 80JJAA of the Act since it constitutes the figure of 30% of additional wages for current year and if eligible than for preceding two years also. Thus, we hold that assessee is eligible for deduction u/s. 80JJAA of the Act in respect of Rs.1,19,33,440/- and Rs.2,02,53,323/- for AYs 2013-14 and 2014-15 respectively and thus ground no. 2 raised by assessee for AYs. 2013-14 and 2014-15 are also allowed.

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