M/S. MULKI SUNDAR RAM SHETTY NAGAR AYYAPPA SWAMY TEMPLE TRUST,BANGALORE vs. INCOME TAX OFFICER, EXEMPTIONS, WARD-2, BANGALORE

The assessee has raised the following grounds of appeal:-

The assessee is a Trust and for the AY 2017-18, the assessee filed the return of income on 22.8.2017 declaring Nil income. During the impugned year, the assessee has received a sum of Rs.59,63,011/- and also corpus receipts of Rs.39,45,774/- aggregating to Rs.99,08,785/-. Out of this, the assessee claimed Rs.58,02,497/- as application towards the objects of the trust and Rs.39,45,774/- towards capital expenses. The assessee accumulated an amount of Rs.8,94,452/- u/s 11(1) of the Income- tax Act,1961 ['the Act' for short]. The assessee had obtained the certificate towards application of funds from a Chartered Accountant in Form 10B which the assessee filed separately on 28.8.2017.

The assessee’s return was processed by the Centralized Processing Centre (CPC) u/s 143(1) of the Act. The CPC while processing the return denied the claim towards application of funds amounting to Rs.97,48,271/- towards the objects of the trust and denied the deduction towards accumulation u/s 11(1) of the Act also. The reason for the denial was stated to be the delay in furnishing the Form 10B and that the same ought to have been filed on or before filing the return of income.

Aggrieved, the assessee preferred an appeal before the CIT(A). The assessee submitted before the ld. CIT(A) that the Form 10B thought not filed along with the return of income, was filed well before the due date for filing the return of income i.e. 31.10.2017 for the relevant AY. The assessee in this regard relied on the decision of the Hon’ble Supreme Court in the case of CIT Vs. Nagpur Hotel Owners’ Association (247 ITR 201) and the decision of the Hon’ble Calcutta High Court in the case of CIT Vs. Hardeodas Agarwalla Trust (1992) 198 ITR 511 (Cal.). The assessee further submitted that the CBDT

The ld. CIT(A) dismissed the appeal of the assessee by stating that as per the above-mentioned circular, the Commissioner (Exemptions) is authorised to condone the delay in filing of Form No.10B up to 365 days for the AY:2017-18 and subsequent assessment years. In the present case, the assessee did not mention anything about condonation petition in its written -submission. It is not known whether the assessee has filed a petition for condonation of delay before the Commissioner (Exemptions) requesting to condone the delay of 6 days in filing of Form No.10B. It is not known whether the delay in filing audit report in Form 10B was condoned by the Commissioner of Income Tax (Exemptions) or not.

The assessee is in appeal before the Tribunal against the order of ld. CIT(A).

The ld. A.R. reiterated the submissions made before the lower authorities. The ld. A.R. drew our attention to para 4(i) of the CBDT Circular (supra) and submitted that the delay in filing Form 10B for AY 2016-17 and 2017-18 is condoned as the same is furnished before the due date u/s 139 of the Act. The ld. A.R. submitted that the assessee whose accounts are subject to audit, the due date for filing the return u/s 139(1) of the Act is 31.10.2017 for AY 2017-18. The ld. A.R. further submitted that the assessee has filed the Form 10B well before the said date i.e. filed the Form 10B on 28.8.2017.

The ld. D.R. on the other hand supported the order of the ld. CIT(A). The ld. D.R. submitted that the assessee should have made an application for condonation of delay failing which, the ld. CIT(A) has correctly denied the deduction.

We heard the rival submissions and perused the materials available on record. We will first look at the relevant extract from the CBDT circular which is as given below: “3. Representations have been received by the Board/field authorities stating that Form No. 10B could not be filed along with the return of income for AY 2016 17 and AY 2017-18. It has been requested that the delay in filing of Form No. 10B may be condoned. Previously, vide instruction in F.No. 267/482/77-IT(part. dated 9-2-1978. the CBDT had authorized the ITO to accept a belated audit report after recording reasons in cases where some delay has occurred for reasons beyond the control of the assessee.

Accordingly, in supersession of earlier Circular/Instruction issued in this regard, and with a view to expedite the disposal of applications filed by such trusts or institutions for condoning the delay in filing Form No. I OB and in exercise of the powers conferred under section 119(2) of the Act, the Central Board of Direct Taxes hereby directs that; (i) The delay in filing of Form No. I0B for AY 2016-17 and AY 2017-18, in all such cases where the Audit Report for the previous year has been obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified under Section 139 of the Act is condoned (ii) In all other cases of belated applications in filing Form No. 10B for years prior to AY 2018-19, the Commissioners of Income-tax are authorized to admit such applications for condonation of delay under section 119(2)(b) of the Act. The Commissioners will while entertaining such belated applications in filing Form No. 10B shall satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time.”