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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI B R BASKARAN, AM & MS. KAVITHA RAJAGOPAL, JM
Date of Hearing : 14.03.2023 : 09.06.2023 Date of Pronouncement O R D E R Per Kavitha Rajagopal, J M:
This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2014-15.
The assessee has challenged the disallowance made deduction u/s. 11(2) of the Act on the ground that the assessee has not filed Form No. 10 before the Assessing Officer (A.O. for short) and that the ld. CIT(A) has failed to accept Form filed during the rectification proceeding. The assessee has also challenged the ground that rectification u/s. 154 of the Act with respect to disallowance of deduction u/s. 11(2) of the Act was not accepted by the lower authorities.
(A.Y.2014-15) Mahadevi Parameshwaridas Jindal Charitable Trust vs.ITO (Exemption) 3. The brief facts of the case are that the assessee is a charitable trust registered u/s. 12A of the Act. The assessee had filed its return of income dated 26.09.2014, declaring total income at Rs.Nil and had claimed deduction u/s. 11(2) of the Act, amounting to Rs.1,54,23,266/-, which was also specified in Form 10B as accumulated or set off for specific purpose u/s. 11(2) of the Act. The assessee stated that it had filed audit report in Form 10B before the due date. The assessee has also stated that the accumulated amount was invested in accordance with the provisions of section 11(5) of the Act. The A.O./CPC disallowed the impugned deduction vide intimation u/s. 143(1) of the Act dated 14.03.2016. The assessee subsequent to the intimation had filed rectified return of income dated 11.05.2016 and had filed rectification application u/s.154 of the Act claiming deduction of Rs.1,54,23,266/- u/s. 11(2) of the Act and CPC vide order dated 10.11.2016 allowed Rs.96,95,008/- u/s. 11(2) of the Act, as against the claim of Rs.1,54,23,266/- and rejected the claim of accumulation u/s.11(2) of the Act as Form 10 was not filed within the due date u/s. 139(1). Subsequently, the assessee filed another rectification application along with an unstamped Form 10 before the A.O. vide its letter dated 15.03.2019 to rectify the mistake apparent from the record resulting in taxable income of Rs.57,28,258/-. It is observed that the rectification application before the jurisdictional A.O. was rejected vide order dated 17.02.2022 passed u/s. 154 r.w.s. 143(1) of the Act.
Aggrieved the assessee was in appeal before the ld. CIT(A) who dismissed the appeal filed by the assessee on the ground that the assessee has no locus standi to challenge the order u/s. 154 of the Act before the ld. CIT(A) and that the denial of exemption from intimation issued u/s.143(1) of the Act only should have been challenged
(A.Y.2014-15) Mahadevi Parameshwaridas Jindal Charitable Trust vs.ITO (Exemption) before the ld. CIT(A). The ld. CIT(A) relied on the decision of Bangalore Tribunal in the case of M/s. Navodaya Education Trust, Raichur vs. DCIT, Bellari (in ITA No. 49/Bang/2021). The ld. CIT(A) held that the delay in furnishing the audit report in Form 10B/10 has to be condoned by the Commissioner as per the CBDT Circular and also for the fact that the assessee has not furnished any such order u/s. 119(2)(b) of the Act for condoning the delay in furnishing the audit report in Form 10B, rejected the assessee’s grounds of appeal
. The ld. CIT(A) relied on the decision of the CIT vs. Shivanand Electronics [1994] 209 ITR
63. (Bom), which held that the assessee has to comply with the requirements casted upon by the legislature and cannot accept the ITO to ask for the same in case of claiming any benefit under the Act. The ld. CIT(A) also held that there was no mistake apparent from the intimation issued u/s. 143(1) of the Act and the same could have been rectified u/s. 154 of the Act, as there was only failure on the part of the assessee to comply with the mandatory requirement of Form 10.
5. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A).
The learned Departmental Representative (ld. DR for short) for the Revenue, on the other hand, controverted the said fact and stated that it was mandatory on the part of the assessee to furnish Form 10 before the due date for filing of the returns and even otherwise in case of delay, the same should have condoned by the ld. CIT. The ld. DR relied on the orders of the authorities below.
(A.Y.2014-15) Mahadevi Parameshwaridas Jindal Charitable Trust vs.ITO (Exemption) 7. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee was given part relief in the first rectification application dated 11.05.2016 u/s. 11(2) of the Act to the extent of Rs.96,95,008/- as against the claim of Rs.1,54,23,266/- where the claim of accumulation u/s. 11(2) of the Act was rejected for the reason that the assessee had belatedly filed Form 10 and the same was without any stamp of jurisdictional A.O. The ld. AR for the assessee contended that there was no requirement to submit Form 10 electronically or otherwise along with the return of income and contended that Form 10 ought to have been submitted before the completion of the assessment proceeding and the assessee in the present case has submitted Form 10 before the completion of assessment /rectification proceeding. The ld. AR further stated that the lower authorities have failed to consider the resolution for accumulation filed before the A.O. and contended that the accumulation of the said amount was done as per the prescribed mode.
From the above observation, it is evident that the rejection of the assessee’s claim was due to the delay in filing Form 10 and the said issue is no longer res integra as it has been decided by various courts in favour of the assessee. The ld. AR for the assessee relied on the decision of the Tribunal in the case of The Goa HinduAssociation vs. ITO (in vide order dated 21.10.2022), where on identical grounds, the Tribunal has decided this issue in favour of the assessee. The relevant extract of the said decision is cited hereunder for ease of reference:
6. It is no longer res integra that the provision for filing Form No. 10 electronically before the due date of filing the Return of Income, introduced by inserting clause (c) in Section 11(2) of the Act by Finance Act 2015, were applicable prospectively to Assessment Year 2016-17 and subsequent assessment years. Un-amended provision of Section 11(2) and Rule 17 would apply to the present case since the assessment year before us is Assessment Year 2015-16. Accordingly, (A.Y.2014-15) Mahadevi Parameshwaridas Jindal Charitable Trust vs.ITO (Exemption) filing of Form 10 would not be governed by any prescribed statutory time limit. However, we note that in the case of CIT Vs. Nagpur Hotel Owner's Association [2001] 247 ITR 201 (SC), the Hon'ble Supreme Court has, while dealing with Section 11(2) of the Act and Rule 17 of the Rules, held that there would be substantial compliance of the applicable provisions in case Form No. 10 was filed by the assessee with the Assessing Officer before the completion of assessment proceedings. The above judgment of the Hon‟ble Supreme Court was followed by the Hon‟ble 7. Bombay High Court in the case of CIT-III, Pune Vs Sakal Relief Fund: [2017] 295 CTR 561 (Bombay) wherein the Hon‟ble Court was pleased to grant the benefit of deduction under Section 11(2) of the Act to an assessee in a case where Form 10 was filed before the Assessing Officer during the course of re-assessment proceedings. Taking note of the aforesaid judgments of the Hon‟ble Supreme Court and the Hon‟ble 8. Bombay High Court, in the case of The Ceylon Pentecostal Mission vs ACIT (CPC), Bangalore [ITA.No.320./Chny/2021, dated 08.10.2021] the Chennai Bench of the Tribunal had, in identical facts and circumstances, held that intimation issued under Section 143(1) of the Act cannot be treated at par with the regular assessment. Since no notice was given to the assessee before disallowing deduction under Section 11(2) of the Act while processing return under section 143(1) of the Act in that case, the assessee did not have any occasion to place Form 10 before the assessing officer. Therefore, the Tribunal allowed the claim of the assessee for deduction under Section 11(2) of the Act on the basis of Form 10 filed in appellate proceedings before CIT(A) by treating such appellate proceedings before CIT(A) as an extension of the assessment proceedings.
9. Similarly, the Bangalore Bench of the Tribunal had, in the case of Bunts Sangha vs The ITO(Ex) Ward-1, Mangaluru [ITA No. 569/ Bang/2018 dated 30.08.2018] had concluded that the rectification application under Section 154 of the Act filed by the assessee in that case was incorrectly rejected holding as under: “9. The view taken by the Tribunal in the aforesaid decision following the decision of Hon'ble Supreme Court in the case of Nagpur Hotel Owners Association (supra) is that intimation required under Section 11 has to be furnished before the assessing authority completes the concerned assessment. In the present case, there was no assessment proceeding and there is only intimation u/s. 143(1) of the Act. An intimation u/s. 143(1) is not an assessment as laid down by the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers in Civil No.2830 of 2007, judgment dated 23.05.2007. In view of the legal position as explained above, we are of the view that the AO ought to have accepted the application for rectification u/s. 154 of the Act. We accordingly direct the AO to allow application u/s. 154 of the Act and rectify the intimation.” (Emphasis Supplied) In view of the above judicial precedents, we hold that the Appellant‟s claim for 10. deduction under Section 11(2) of the Act was incorrectly rejected while processing return of income. The application for rectification ought to have been accepted. Accordingly, we direct the Assessing Officer to rectify the intimation and delete the addition of INR.46,52,761/-.
From the above observation, it is evident that the delay in filing Form 10 prior to A.Y. 2016-17 would not be covered under the statutory time limit as per the insertion of clause (c) in section 11(2) of the Act by Finance Act, 2015. Further, the Hon'ble Apex
(A.Y.2014-15) Mahadevi Parameshwaridas Jindal Charitable Trust vs.ITO (Exemption) Court decision in the case of CIT vs. Nagpur Hotel Owner’s Association [2001] 247 ITR 201 (SC), held that Form 10 if filed before the completion of the assessment proceeding, the same would amount to substantial compliance of 11(2) of the Act and Rule 17 of the Rules. Hence, by respectfully following the above said decisions, we set aside the order passed by the ld. CIT(A) and direct the A.O. to allow the benefit of accumulation of income u/s. 11(2) of the act after duly considering Form 10 filed by the assessee in accordance with the law.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 09.06.2023 Sd/- Sd/- (B. R. Baskaran) (Kavitha Rajagopal) Accountant Member Judicial Member Mumbai; Dated : 09.06.2023 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT - concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,