Deduction u/s 80JJAA Valid Despite Delay in Filing Form 10DA

By | February 4, 2026
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Deduction u/s 80JJAA Valid Despite Delay in Filing Form 10DA

1. The Core Dispute: Technical Delay vs. Substantive Right

The assessee claimed a deduction under Section 80JJAA, which provides a tax incentive for businesses that generate new employment. The Assessing Officer (AO) disallowed the claim during the processing of the return under Section 143(1) because the mandatory audit report in Form 10DA was not filed by the prescribed due date.

  • The Timeline: * Form 10DA Filed: 05-10-2023 (After the “specified date” but before the return was processed).

    • Form 10DA Revised: 21-10-2023 (To correct a technical error).

    • Return of Income Filed: 18-10-2023.

  • AO’s Stand: Filing Form 10DA before the “specified date” (usually one month before the ITR due date) is a mandatory condition. Late filing constitutes a breach of the statute, leading to automatic disallowance.

  • Assessee’s Stand: The delay was procedural and technical. Since the form was available on the record before the return was processed, the deduction should not be denied on a mere technicality.

2. Legal Analysis: Mandatory vs. Directory Provisions

The Tribunal analyzed whether the timing of filing the audit report is “mandatory” (obligatory) or “directory” (procedural).

I. Availability Before Assessment

The ITAT followed the principle that if a required certificate or audit report is available with the tax authorities before the final order of assessment (or intimation under Section 143(1)) is passed, the assessee has “substantially complied” with the law.

II. No Prejudice to Revenue

The court noted that the delay did not cause any loss or prejudice to the Revenue. The revision of the form to correct a technical error further demonstrated the assessee’s bona fide intent to provide accurate data.

III. Procedural Omission

Relying on precedents like International Tractors Ltd. and Jubilant Foodworks Ltd., the Tribunal held that denying a substantive benefit intended to encourage employment because of a minor delay in a procedural filing is contrary to the spirit of the Act.

3. Final Ruling and Impact

The Tribunal held that the AO was not justified in disallowing the deduction.

  • Outcome: The disallowance was deleted, and the deduction under Section 80JJAA was allowed.

  • Reasoning: A procedural delay in filing Form 10DA cannot override the substantive eligibility of the assessee for the deduction if the details are verified and available before the return is processed.

Key Takeaways for Taxpayers

  1. Deduction Quantum: You get 30% of the “Additional Employee Cost” for three years.

  2. Eligibility Check: Ensure new employees meet the ₹25,000 salary cap and have worked for at least 240 days (150 days for apparel/footwear).

  3. Form 10DA Importance: While courts may be lenient with delays, ensure Form 10DA is filed electronically via a Chartered Accountant. If you miss the deadline, ensure it is uploaded before the CPC processes your return.

IN THE ITAT INDORE BENCH
Charchit Garg
v.
Income-tax Officer*
Siddhartha Nautiyal, Judicial Member
and BHAGIRATH MAL BIYANI, Accountant Member
IT Appeal No. 306 (Ind) of 2025
[Assessment year 2023-24]
JANUARY  13, 2026
Santosh Deshmukh, CA for the Appellant. Ashish Porwal, Sr. DR for the Respondent.
ORDER
Siddhartha Nautiyal, Judicial Member.- The present appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals), ADDL/JCIT(A)-3, Visakhapatnam vide order dated 30.01.2025 passed for A.Y. 2023-24.
2. The Assessee has raised the following grounds of appeal:
Grounds of appeal before Honorable ITAT
1.On the facts and circumstances of the case and in law the Learned J-CIT(A) has erred in passing the order u/s 250 of the Act and upholding the addition of Rs. 4,58,090/- for the reason that the report in form No. 10DA was not filed within the time prescribed.
2.On the facts and circumstances of the case and in law the Ld. J-CIT (A) has failed to appreciate that the assessee complied with all requisite for claiming exemption u/s 80JJAA of the Act and also erred in not considering that the non-filing of any required form/certificate within the time is a technical and procedural defect and the assessee was to be allowed the deduction according to following judicial pronouncement
a.(Ahmedabad – Trib.)/[2024] 207 ITD 82 (Ahmedabad – Trib.) IN THE ITAT AHMEDABAD BENCH ‘A’ Akuntha Projects (P.) Ltd. v. Deputy Director-CPC.
b.[1998] 230 ITR 714 (Madhya Pradesh) HIGH COURT OF MADHYA PRADESH Commissioner of Income-tax v. Devradhan Madhavlal Genda Trust A.K. MATHUR, C.J. AND S.K. KULSHRESTHA, J. M.C.C. NO. 138 OF 1990 FEBRUARY 26, 1996.
3.On the facts and circumstances of the case and in law the Ld. J-CIT(A) erred in considering the fact that assessee has filed the original form 10DA before filling of the Income Tax return as the assessee was eligible to claim the exemption u/s 80JJAA on the basis of new employees employed during the year and the same was available on the record at the time of assessment u/s 143(1). Hence, deduction u/s 80JJAA should have been allowed on the basis thereof.
4.That the appellant further craves leave to add alter and or amend any of the forgoing grounds of appeals as and when considered necessary.
3. The brief facts of the case are that the assessee, Shri Charchit Garg, is an individual engaged in the business of manufacturing of apparels and is a regular taxpayer. For the Assessment Year 2023-24, relevant to the Previous Year 2022-23, the assessee filed his return of income on 18.10.2023 declaring a total income of Rs. 46,49,812/- after claiming deduction under section 80JJAA of the Income-tax Act, 1961 amounting to Rs. 4,58,090/-. The tax liability of Rs. 12,55,741/- was duly discharged through TDS, advance tax and selfassessment tax.
4. The return of income was processed by the CPC under section 143(1) of the Act on 31.07.2024. While processing the return, the Assessing Officer disallowed the deduction claimed under section 80JJAA of the Act on the ground that the assessee had not furnished the prescribed audit report in Form No. 10DA within the due date prescribed under the Act and the Rules. As a result, an addition of Rs. 4,58,090/- was made and the total income was determined at Rs. 51,07,900/-.
5. Aggrieved by the intimation dated 31.07.2024 passed under section 143(1), the assessee preferred an appeal before the learned CIT(Appeals). Before the CIT(Appeals), the assessee submitted that he had complied with all substantive conditions prescribed under section 80JJAA, that Form No. 10DA was filed electronically on 05.10.2023 and a revised Form No. 10DA was filed on 21.10.2023 to rectify an inadvertent error relating to the date of the tax audit report, and that the return of income itself was filed on 18.10.2023. It was contended that filing of Form No. 10DA within the prescribed time is a procedural requirement and that the deduction could not be denied when the form was available on record before processing of the return. Reliance was placed on various judicial precedents in support of the contention that procedural lapses cannot defeat substantive claims. The learned CIT(Appeals), however, held that in terms of section 80JJAA(2)(c) read with Rule 19AB and Rule 12(2), Form No. 10DA was required to be furnished on or before the specified date referred to in section 44AB, which, in the case of the assessee, was 30.09.2023. Since the assessee had filed Form No. 10DA on 05.10.2023, the learned CIT(Appeals) held that the statutory requirement was not fulfilled and accordingly confirmed the disallowance made by the CPC and dismissed the appeal.
6. The assessee is in appeal before us against the order passed by the CIT(Appeals) dismissing the appeal of the assessee.
7. Before us, the Counsel for the assessee submitted that the assessee is a manufacturing entity providing employment opportunities and has been consistently claiming deduction under section 80JJAA of the Act from earlier assessment years. It was submitted that for the year under consideration also, there is no dispute regarding the eligibility of the assessee or the computation of additional employee cost and that all substantive conditions of section 80JJAA stand fully satisfied. It was further submitted that Form No. 10DA was filed on 05.10.2023 and revised on 21.10.2023 only to correct a technical error, and that the return of income was filed on 18.10.2023. Thus, Form No. 10DA was very much available on the income-tax portal before the return was processed under section 143(1) of the Act on 31.07.2024. The learned Counsel contended that the delay, if any, in filing Form No. 10DA is purely technical and procedural and cannot override the substantive right of the assessee to claim deduction.
8. The learned Counsel placed reliance on the judgment of the Hon’ble Madhya Pradesh High Court in CIT v. Devradhan Madhavlal Genda Trust [1998] 230 ITR 714 (Madhya Pradesh), the judgment of the Hon’ble Gujarat High Court in CIT v. Xavier Kelavani Mandal (P.) Ltd. (Gujarat), and the recent decision of the Ahmedabad Bench of the Tribunal in Akuntha Projects (P.) Ltd. v. Deputy Director (CPC) [2024] 207 ITD 82 (Ahmedabad – Trib.), wherein it has been held that filing of audit reports or prescribed forms is procedural in nature and delay therein cannot be a ground to deny deduction when the form is filed before completion of assessment or processing of return and the assessee otherwise fulfils all statutory conditions. It was therefore prayed that the disallowance made under section 143(1) be deleted.
9. We have heard the rival contentions and perused the material on record. It is an undisputed fact that the assessee fulfils all the substantive conditions prescribed under section 80JJAA of the Act and that the claim relates to additional employee cost incurred in the course of an eligible manufacturing business. There is also no dispute with regard to the eligibility of the assessee or the quantum of deduction claimed. The sole basis for disallowance of the claim under section 80JJAA is the alleged delay in filing of Form No. 10DA.
10. From the record, it is evident that Form No. 10DA was filed by the assessee on 05.10.2023 and thereafter revised on 21.10.2023 to rectify a technical error, while the return of income itself was filed on 18.10.2023. The return of income was processed under section 143(1) of the Act on 31.07.2024. Thus, Form No. 10DA was very much available on record much prior to the processing of the return under section 143(1) of the Act. The disallowance has been made solely on the ground that the said form was not filed within the time prescribed under the Rules, without disputing the fulfillment of substantive conditions of section 80JJAA. The Hon’ble Madhya Pradesh High Court in the case of Devradhan Madhavlal Genda Trust (supra) has clearly held that filing of an audit report is a procedural requirement and that such report can be furnished even at a later stage before completion of assessment. Similarly, the Hon’ble Gujarat High Court in Xavier Kelavani Mandal (P.) Ltd. (supra) has held that delay in furnishing the audit report cannot be a ground to deny deduction when the assessee has otherwise complied with the substantive provisions of law. The Ahmedabad Bench of the Tribunal in Akuntha Projects (P.) Ltd. (supra) has also held that the requirement of filing the prescribed form within the stipulated time is directory in nature and that deduction cannot be denied when the form is filed before processing of the return.
11. The issue now stands further fortified by the decision of the Hon’ble Supreme Court in CIT (Exemption) v. Anjana Foundation (SC), order dated 15.09.2025, wherein the Hon’ble Supreme Court dismissed the SLP filed by the Revenue and upheld the view that the benefit of exemption cannot be denied solely on account of non-filing of the audit report within the prescribed time, as such requirement is only procedural in nature. Similar view has been taken by the Ahmedabad Bench of the Tribunal in Shree Vardhman Stanakvasi Jain Shravak Trust v. Income-tax Officer (Ahmedabad – Trib.)/ITA No.1881/Ahd/2024, order dated 14.02.2025, after considering the judgment of the Hon’ble Gujarat High Court in Association of Indian Panelboard Manufacturers v. DCIT (Gujarat)/[2025] 482 ITR 54 (Gujarat), wherein it has been held that while obtaining an audit report may be a substantive requirement, the time and manner of furnishing the same is purely procedural and what is relevant is the availability of the audit report at the time of assessment proceedings.
12. The Hon’ble Gujarat High Court in Parul Mahila Pragati Mandal v. Income-tax Officer (Exemption)  (Gujarat), order dated 30.04.2025, has also reiterated that filing of audit report is a procedural requirement and even if such report is filed at a later stage, the assessee cannot be denied the benefit otherwise available under law. Consistent view has also been taken by the Tribunal in Shree Swaminarayan Charitable Trust v. ITO [ITA No.1106(Ahd) OF 2024, dated9-10-2024].
13. Respectfully following the aforesaid judicial precedents and considering the facts of the present case, we are of the considered view that the deduction claimed by the assessee under section 80JJAA could not have been denied merely on account of a technical and procedural delay in filing Form No. 10DA, when the said form was filed before processing of the return under section 143(1) of the Act and no prejudice has been caused to the Revenue. Accordingly, the addition of Rs. 4,58,090/- made while processing the return under section 143(1) of the Act dated 31.07.2024 is hereby directed to be deleted and the Assessing Officer/CPC is directed to allow the deduction under section 80JJAA as claimed by the assessee.
14. In the result, the appeal of the assessee is allowed.