ST MARYS EDUCATION SOCIETY ALIGARH,ALIGARH vs. DEPUTY COMMISSIONER OF INCOME-TAX, EXEMPTION CIRCLE,, GHAZIABAD

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ITA 580/DEL/2024Status: DisposedITAT Delhi22 August 2025AY 2014-156 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that for AY 2014-15, the assessee claimed exemption under Section 12A, which was not allowed by the CPC. The CIT(A) dismissed the appeal ex-parte. The Tribunal set aside the issue to the AO with a direction to verify if the assessee has a valid registration under Section 12A and if all conditions for exemption were fulfilled. If so, the exemption under Section 12A should be allowed. The appeal was partly allowed for statistical purposes. For AY 2019-20, the Tribunal observed that the assessee claimed exemption under Section 12A and filed Audit Report in Form 10B within the statutory time. The lower authorities had disallowed exemption under Section 10(23C) for want of Audit Report in Form 10BB. The Tribunal found that this aspect, i.e., the claim for Section 12A exemption and the timely filing of Form 10B, was not considered by the lower authorities. Therefore, the orders of the lower authorities were set aside, and the matter was remanded to the AO to verify the valid registration under Section 12A and, if found correct, allow exemption under Section 12A, as the necessary Audit Report in Form 10B was filed within the statutory timeline. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, St. Marys Education Society (for AY 2014-15) and Saint Marys School (for AY 2019-20), filed appeals against orders of the CIT(A) which upheld intimation orders under Section 143(1) from the CPC. For AY 2014-15, the CPC disallowed exemption claimed under Section 12A, stating no such claim was made. A rectification application under Section 154 was dismissed by the CPC and subsequently by the CIT(A) ex-parte. For AY 2019-20, the CPC disallowed exemption under Section 10(23C) due to non-filing of Audit Report in Form 10BB, and also noted a claim for exemption under Section 12A. The CIT(A) partly allowed the appeal, disallowing Section 10(23C) exemption but allowing deduction of expenditure. The assessee is in appeal before the ITAT for both assessment years.

What were the issues?

1. Whether the assessee is eligible for exemption under Section 12A of the Income Tax Act, 1961, for AY 2014-15, and if so, whether the AO should verify the conditions for such exemption. (Mixed law and fact) 2. Whether the assessee is eligible for exemption under Section 12A of the Income Tax Act, 1961, for AY 2019-20, and if so, whether the AO should verify the conditions for such exemption, considering the filing of Audit Report in Form 10B. 3. Whether the assessee is eligible for exemption under Section 10(23C) of the Income Tax Act, 1961, for AY 2019-20, and if so, whether the filing of Audit Report in Form 10BB is mandatory. Assessee's contentions (AY 2019-20): The assessee claimed exemption under Section 12A and filed Audit Report in Form 10B within the statutory time. It argued that it did not claim relief under Section 10(23C), thus no Audit Report in Form 10BB was required. The assessee also sought permission to file additional grounds. Revenue's contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 12A,Section 143(1),Section 154,Section 250,Section 10(23C),Section 139(4A),Section 11

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI “G” BENCH: NEW DELHI

Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL

For Respondent: Shri Mahesh Kumar, CIT DR
Hearing: 03.06.2025Pronounced: 22.08.2025

Heard together (2 matters)

ITA No.580/Del/2024
ITA No.1667/Del/2023

Read from the judgment's own cause title. This page is filed under one of them.

ORDER PER MANISH AGARWAL, AM : Both the captioned appeals are filed by the assessee against the separate orders dated 15.12.2023 & 31.03.2023 passed by Ld. Commissioner of Income Tax, National Faceless Appeal Centre Page | 1 1667/Del/2023 (“NFAC”), Delhi [“Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 [“the Act”] against the intimation u/s 143(1) by CPC dated 25.11.2019 and 26.05.2020 for Assessment Years 2014-15 & 2019- 20 respectively.

1.

2. At the time of hearing, none appeared on behalf of the assessee in Year 2014-15]. Ld.AR for the assessee appeared in [Assessment Year 2019-20] and was heard. We find that the issues involved for Assessment Years 2014-15 and 2019-20 are common, interlinked and identical. Hence, both the appeals are adjudicated by this common order.

3.

Brief facts of the case are that the assessee is an educational society and filed its return of income, claiming exemption u/s 12A of the Act whereas while processing the return of income u/s 143(1) of the ACIT, CPC has not allowed exemption claimed u/s 12A of the Act to the society therefore, an application u/s 154 of the Act was filed for the rectification before CPC. The CPC vide order dated 25.11.2019 passed u/s 154, had dismissed the application of the assessee by stating the following reasons:-

1.

“Assessee has disclosed income and has not computed tax on the same. System has computed tax on the income applicable to the Status as mentioned in the Schedule Part A General of the Return. It is proposed to rectify this mistake u/s 154, as the same is apparent from the record. It is proposed to re-calculate the income tax at the appropriate rates.”

1667/Del/2023 4. Against this order, the assessee preferred an appeal before Ld. CIT(A) who dismissed the appeal by holding that it is not a matter of rectification as there was no mistake apparent on record. It is further seen that Ld.CIT(A) has decided the appeal ex-parte as the assessee has failed to file any submissions.

5.

Heard the contention of Ld.CIT DR and perused the material available on record. In the instant case from the perusal of the order of Ld. CIT(A), it appears that the assessee is registered u/s 12A of the Act and is engaged in the activity of imparting education. The return of income was filed wherein assessee had claimed exemption u/s 12A of the Act which has not been allowed by the CPC for the reasons that there was no such claim in the return of income filed though assessee claimed that it was eligible and claimed exemption u/s 12A in the return of income filed. In view of these facts, we set aside this issue to the file of AO with the direction to verify whether the assessee is having valid registration u/s 12A of the Act. If the assessee is eligible for exemption u/s 12A of the Act and if all the conditions prescribed therein i.e. filing of Audit Report etc. were fulfilled, in our considered opinion, it is entitled for exemption u/s 12A of the Act. Thus, AO is directed to verify all these facts and allow the exemption u/s 12A if all the conditions are satisfied coupled with the fact that assessee must have valid registration u/s 12A of the Act. With these directions, the appeal of the assessee is partly allowed for statistical purposes.

[Assessment Year : 2019-20]

7.

Brief facts of the case are that the assessee has filed return of income on 01.10.2019 wherein exemption u/s 12A of the Act was claimed and Audit Report in Form 10B, as prescribed was filed on 28.09.2019 and total income was claimed at NIL after claiming exemption u/s 12A of the Act.

8.

The CPC while processing the return of income of the assessee, had not allowed the claim of exemption by observing that the assessee has not filed Audit Report in Form 10BB on or before filing the return of income and further observed that the assessee has claimed exemption u/s 10(23C) of the Act.

9.

Against the said order of CPC, assessee filed an appeal before Ld.CIT(A) who partly allowed the appeal of the assessee wherein Ld. CIT(A) has not allowed the exemption u/s 10(23C) of the Act in absence of the Audit Report u/s 10BB of the Act. However, allowed deduction of the expenditure of INR 8,07,21,363/- claimed an application against the total receipts declared by the appellant society at INR 9,89,99,709/-.

10.

Aggrieved by the said order, the assessee is in appeal before the Tribunal by taking following grounds of appeal:- Page | 4 1667/Del/2023 1. “Because Amount applied for capital expenditure? 1,82,78,346/- as per Sec 11 or 12 of the Income Tax Act, are allowable expenditure.

2.

Because the assessment is not based on provision of Law, as the School has registered u/s 12 A of the Income tax Act, and the Income tax return has been filed u/s 139 (4A) of Income Tax Act, claiming deduction u/s 11 and also filed Audit Report in Form 10B electronically; and the School has not claimed relief u/s 10 (23C), so no need to file the Audit Report in Form 10BB to claim exemption u/s 11 of the Income Tax Act.

3. Because the appellant seeks your Honours Permission to file additional grounds of appeal before the hearing of the Appeal.”

11. Heard the contentions of both the parties and perused the material available on record. From the perusal of order of Ld. CIT(A), it is seen that Ld. CIT(A) as well as CPC observed that assessee society is not entitled for exemption u/s 10(23C) of the Act as the assessee has not filed the Audit Report in Form No.10BB as prescribed under the Act for claiming exemption u/s 10(23C) of the Act. It was the claim of the assessee that it had claimed exemption u/s 12A of the Act for which the Audit Report as prescribed under the Act under Form 10B was filed well within the statutory time which fact had not been disputed therefore, it is entitled for exemption u/s 12A of the Act. It is further stated that once the exemption was not claimed u/s 10(23C) of the Act, there is no requirement to file the Audit Report in Form 10BB. We find that this aspect has not been considered by the lower authorities. This being so, we set aside the orders of the lower authorities and remand the matter to the file of AO for verification of the fact whether assessee has valid registration certificate to claim exemption u/s 12A of the Act and if the contention is found correct, 1667/Del/2023 the assessee is eligible for exemption u/s 12A, as the necessary Audit Report under Form 10B was filed within the statutory timeline. With these directions, the appeal of the assessee is allowed for statistical purposes.

12.

In the result, appeal of the assessee is allowed for statistical purposes.

13.

In the combined result, both the appeals of the assessee in [AY 2014-15] 1667/Del/2023 [AY 2019-20] are allowed for statistical purposes.

Order pronounced in the open Court on 22.08.2025.

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