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Income Tax Appellate Tribunal, “SMC - B” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K
O R D E R This appeal at the instance of the assessee is directed against CIT(A)’s order dated 26.06.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2022-23.
The grounds raised
read as follows:
1. Learned Commissioner of Income tax (Appeals) ought not have dismissed the appeal holding there is no response to the notice of hearing, when the appellant has filed its written submission on 06-06-2023 (A copy of acknowledgment and written submissions enclosed for perusal of the Hon'ble Tribunal)
2. Order of the learned Commissioner of Income tax (Appeals) erred in upholding the adjustments made in the intimation u/s.143(1) of the Act, are prima facie adjustments and permissive adjustments.
3. The learned Commissioner of Income tax (Appeals) ought to have considered form 9A and form no 10 filed which are filed on 28-092022 within the period prescribed u/s.139(1) of the Act.
4. The learned Commissioner of Income tax (Appeals) ought to have considered the alternative plea of the Appellant that the appellant is entitled to exemption u/s.10(23c)(iiiad) of the Act, and therefore intimation is not sustainable.
5. The learned Commissioner of Income tax (Appeals) erred in confirming the interest levied u/s.234B &234C of the Act. 6. The appellant prays that this Hon'ble be pleased to permit the appellant to add, delete or modify any ground or grounds at the time of hearing.
Brief facts of the case are as follows:
Assessee is a Trust registered under section 12A of the Act. Assessee is carrying on charitable activities in the field of education. For the Assessment Year 2022-23, the return of income was filed on 29.10.2022 declaring ‘Nil’ income, after claiming deduction under section 11 of the Act. The gross receipt of the assessee Trust for the relevant Financial Year was Rs.1,60,51,879/-. The assessee Trust had applied a sum of Rs.1,10,51,869/- towards objects of the Trust (a sum of Rs.69,03,921/- was applied on Revenue’s account and Rs.41,50,948/- on capital account). The assessee Trust exercised the option under section 11(2) of the Act for accumulation of the amount by filing requisite applications well within the time prescribed. The return of income was processed under section 143(1) of the Act, vide intimation dated 13.04.2023. In the said intimation, the claim of deduction under section 11 of the Act was restricted and the assessee’s income was determined at Rs.24,07,783/- as against the ‘Nil’ income declared.
Aggrieved by the intimation issued under section 143(1) of the Act, assessee filed appeal before the First Appellate Authority (FAA). Before the FAA, it contended that assessee Trust had exercised option under section 11(2) of the Act and had filed necessary applications within the prescribed time limit. It was also argued that since assessee’s gross receipts from education institution is less than Rs.5 Crores, income ought to be exempt under section 10(23C(iiiad) of the Act. The CIT(A), however, rejected the appeal of the assessee by impugned order dated 26.06.2023. The CIT(A) held that assessee had exercised option only to the extent of Rs.25,92,218/- and concluded that the restriction under sections 11 and 12 is valid.
Aggrieved by the order of the CIT(A), the assessee has filed the present appeal before the Tribunal. The learned AR submitted that the assessee had filed an application in Form 10 under Rule 17(2) of the Income Tax Rules, 1962, wherein it had exercised the option for the entire sum of Rs.50 lakhs to be accumulated and spent in the future years under section 11(2) of the Act. It was further submitted that while uploading Form No.9A, the software by default considered only the amount in excess of 15% for the purpose of accumulation. It was submitted that Form No.10 (at Page 39 filed along with Memorandum of Appeal) makes the position very clear that assessee had sought for accumulation of the entire sum of Rs.50 lakhs.
The learned Standing Counsel supported the order of the CIT(A).
I have heard the rival submissions and perused the material on record. For the purpose of claiming deduction under section 11 of the Act, the Trust or institution has to spend 85% of the receipt in the year towards the objects of the Trust/institution. In the event the assessee Trust is unable to spend the requisite receipt on objects of the Trust, the assessee Trust can file for accumulation under section 11(2) of the Act. In the instant case, the computation of option exercised under section 11(2) of the Act is as under:
Gross Receipts Rs.1,60,51,879/- Amount Spent Towards Objects: Revenue A/c Rs.69,03,921/ - Capital A/c Loan Rs.33,56,890/- Repayment Rs.07,91,058/- Rs.1,10,51,869/- Balance Rs. 50,00,000/- Less: Accumulation allowed LI/ s 11(1)(a) Rs. 24,07,782/- Balance Rs. 25,92,218/- Amount mentioned in Form 9A Rs. 25,92,218/-
In this case, the return of income was filed within the due date specified and Form 9A exercising option under section 11(2) of the Act was uploaded electronically. It is stated that amount of Rs.25,92,218/- sought for accumulation is generated by the software when uploading Form 9A after considering the accumulation of 15% of the gross receipt allowable under section 11(1)(a) of the Act. The assessee Trust had placed on record Form No.10 which has been enclosed at page 39 of the Memorandum of Appeal. On perusal of the same, it is clear that assessee had sought for accumulation of Rs.50 lakhs instead of Rs.25,92,218/- mentioned in Form 9A. This fact has not been noted by the CIT(A) in the impugned order dated 26.06.2023. In the interest of justice and equity, I am of the view that the matter needs reconsideration by the AO, since accumulation under section 11(2) of the Act was restricted under section 143(1) of the Act. Hence, the issue is restored to the files of the AO to examine the claim of the assessee. Assessee is directed to furnish the relevant Form 9A and Form 10 before the AO to justify its claim of accumulation for a sum of Rs.50 lakhs. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Pronounced in the open court on the date mentioned on the caption page.