M.A.A. Khan, Judicial Member - (1.) IN this appeal Revenue is aggrieved against the admissibility of assessee's claim for deduction Under Section80HH of the IT Act, 1961 (the Act). The ITO had rejected the said claim for Rs. 23,464 on the ground that the audit report had not been filed along with the return, as required by Section 80HH(5). The CIT(A), however, accepted assessee's claim on the ground that such report had been filed by the assessee before the completion of the assessment.
(2.) The contention of the learned D.R. is that furnishing the audit report along with the return is a mandatory requirement of Section 80HH(5) and, therefore, the action of the ITO was right in law. Support for this argument has been sought from the Punjab & Haryana High Court decision in the case of CIT v. Jaideep Industries [1989] 180 ITR 81/45 Taxman 444. On the other hand, the learned counsel for the assessee has supported the view of the learned CIT(A) with a number of Tribunal's decisions and the ratio in the decision of the Gujarat High Court in the case of Billimora Engg. Mart v. CIT [1985] 156 ITR 153. In our opinion the order under appeal should call for no interference by us. Section 80HH(5) reads as under: Where the assessee is a person other than a company or a cooperative society, the deduction under Sub-section (1) shall not be admissible unless the accounts of the industrial undertaking or the business of the hotel for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant as defined in the Explanation below Sub-section (2) of Section 288 and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant. A bare reading of the above provision shows that the condition precedent for the admissibility of the claim for deduction Under Section 80HH is the proof of audit of the accounts of the assessee by an accountant. Such a proof is to be given by the report of the accountant in the prescribed form duly signed and verified by the accountant Once that has been done benefit of Section 80HH cannot be withheld. The stress of the words "shall not be admissible" used in the language of Section 80HH(5) is on the requirement of getting the accounts audited by an accountant and proving that fact with the audit report of the accountant in the prescribed form duly signed and verified by the accountant These are the mandatory requirements for the admissibility of the claim Under Section 80HH. And these may be fulfilled up to the stage the income is assessed, when the question of admissibility of the claim Under Section 80 HH would arise for consideration. The very fact that the admissibility of the claim is to be considered at the time of making assessment makes the requirement of furnishing the audit report 'along with the return' simply desirable or, in other words, directory and not mandatory. We think, we are supported in our view with the decisions of the Tribunal in the cases of Gujarat Oil & Allied Industries v. ITO [1982] 14 TTJ 552 (Ahd.), Rathi Gum Industries v. ITO [1982] 14 TTJ 655(Jp.)and Madhu Krimps v. Fourth 770 [1985] 22 TTJ 275 (Bom.). It can hardly be disputed that Section 80HH(5) is a procedural provision and, as held by the Supreme Court in the case of CST v. Auraiya Chamber of Commerce [1987] 167 ITR 458, "in interpreting the procedural provisions of an Act, fairness and justice should be the approach and even in a fiscal statute, equity should prevail whenever the language permits". While considering the question of admissibility of a claim of an assessee for deduction Under Section 80HH at a stage subsequent to the stage of filing the return it is to be seen whether the accounts of the industrial undertaking or the business of the hotel, as the case may be, have been audited by an accountant and such a fact stands proved by the report of such audit in the prescribed form duly signed and verified by the accountant. Once these requirements are fulfilled there would be compliance of Section 80HH(5) in letter and spirit. This approach of ours finds strength from the decision of the Gujarat High Court in the case of Billimora Engg. Mart (supra) where the non-filing of instrument of partnership along with the application Under Section 185 was found a curable defect only, though Section 185(5) provided that the application for registration shall be accompanied by the original instrument evidencing the partnership.
(3.) THE Punjab & Haryana High Court, in the case cited by the learned D.R., was concerned with the claim for investment allowance of an assessee and in that context it was held that the provisions of Section 80J(6A) were mandatory and non-filing of the audit report along with the return would defeat the claim of the assessee for the benefit of Section 80J. THE provisions of Section 80HH(5) are no doubt couched in the same language as are of Section 80J(6A) but we have mentioned above the approach of the Supreme Court and the High Court of Gujarat in the matter of interpreting the procedural provisions in a fiscal statute. We have also mentioned that the Tribunal has consistently taken the view of the provisions of Section 80HH(5) which we have adopted in this case. With great respects to their Lordships of the Punjab & Haryana High Court we prefer to follow the approach of the Supreme Court and the Gujarat High Court in the matter before us.;