ITAT Slams CPC for Ignoring CBDT Extension on Form 56F; Upholds S. 10AA Deduction Despite Late Return

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that the Centralised Processing Centre (CPC) wrongly denied the deduction by ignoring the CBDT’s extension for filing Form 56F and by retrospectively applying a statutory amendment that was not applicable for the relevant assessment year. The bench of Yogesh Kumar U.S. (Judicial Member) and S.Rifaur Rahman (Accountant Member) has upheld the allowability of deduction under Section 10AA of the Income-tax Act, 1961, even though the return of income was filed beyond the due date under Section 139(1). The dispute arose for Assessment Year (AY) 2023–24. The assessee, engaged in the manufacture and trading of electrical enclosures from its unit located in Adani SEZ, Mundra, filed its return of income declaring a normal income of ₹47.43 lakh and book profits of ₹3.23 crore under Section 115JB. It claimed a deduction of ₹2.99 crore under Section 10AA after filing Form 56F, the mandatory audit report for claiming SEZ deductions. Due to technical glitches in the income-tax portal, the facility for filing Form 56F was not available before the original due date. Recognising this issue, the Central Board of Direct Taxes (CBDT) extended the due date for filing Form 56F up to 31 December 2023 through Circular No. 18/2023. The assessee filed Form 56F on 27 November 2023, well within the extended timeline, and had also filed its tax audit report under Section 44AB within the prescribed time. While processing the return under Section 143(1), the CPC disallowed the Section 10AA deduction on two grounds. First, it treated Form 56F as belated, overlooking the CBDT’s extension. Second, it denied the deduction on the basis that the return was not filed within the due date under Section 139(1). The assessee challenged the adjustment before the Commissioner of Income Tax (Appeals). The CIT(A) accepted the contention that Form 56F had been filed within the extended period granted by the CBDT and directed the Assessing Officer to verify compliance with the substantive conditions of Section 10AA. After verification, the Assessing Officer granted appeal effect, confirming that the conditions for claiming the deduction were duly satisfied. Aggrieved by the relief granted, the department carried the matter to the ITAT, arguing that Section 143(1)(v) mandated disallowance of the deduction since Form 56F was allegedly not filed within time. The Department contended that the CPC’s adjustment was valid and should not have been interfered with by the CIT(A). The ITAT rejected the Revenue’s arguments and upheld the order of the CIT(A). The Tribunal noted that the CBDT had expressly extended the due date for filing Form 56F till 31 December 2023 and that the assessee had complied with this extended timeline. Consequently, the CPC’s treatment of Form 56F as belated was found to be factually and legally incorrect. On the issue of late filing of return, the Tribunal observed that the proviso to Section 10AA mandating filing of return within the due date under Section 139(1) was inserted by the Finance Act, 2023 with effect from 1 April 2024, i.e., applicable from AY 2024–25 onwards. The CPC, however, applied this amendment retrospectively to AY 2023–24, which the Tribunal held to be impermissible. Relying on earlier coordinate bench decisions, including Arvind Kumar Agarwal v. ITO and Arvind Kumar Agarwal v. Pr. CIT, the Tribunal reiterated that where the Legislature had consciously not prescribed a condition of timely filing under Section 139(1) for earlier years, such a requirement could not be judicially or administratively read into the statute. Concluding that the assessee had fulfilled all statutory conditions applicable for AY 2023–24, the ITAT refused to interfere with the CIT(A)’s findings and dismissed the Revenue’s appeal. Case Details Case Title: DCIT Versus MD Equipment Pvt. Ltd. Case No.: ITA No.3523/Del/2025 Date: 05.01.2026 Counsel For Appellant: Sarish Aggarwal, CA Counsel For Respondent: Abhjeet Kumar, Sr. DR Click Here To Read Order Read More: GYANOTSAV 2026: Two-Day National Conference to Blend Law, Tax, AI and Wellness in Surat

ITAT Slams CPC for Ignoring CBDT Extension on Form 56F; Upholds S. 10AA Deduction Despite Late Return

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