INCOME TAX OFFICER- 23(3)(1), MUMBAI vs. UTI ASSET MANAGEMENT COMPANY LIMITED EMPLOYEES PROVIDENT FUND, MUMBAI

The assessee has raised the following grounds of appeal: “1. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs. 22,81,20,00/- claimed u/s 10(25) of the Act, without appreciating that, as per the provisions of section 10(25) of the Income-Tax Act, 1961, for claiming the exemption u/s 10/25) of the Act, it is mandatory that the ROI should be filed within the due date, whereas the assessee firm has filed belated ROI on 24.01.2019, which is after the due date of 31.10.2018 for A.Y. 2018-19? 2. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in not appreciating the decision of Hon'ble Supreme Court in the case of M/s. Goetze (India) Ltd Vs CIT, wherein the appeal of the Tribunal has been dismissed by stating that the power to entertain of claim for deduction is vested in the assessing Authority, otherwise than by filing a revised return only, whereas the assessee firm has claimed deduction u/s.10(25) of the Act, on belated return and not on revised return ?"

Brief facts of the case are that the assessee filed return on 24.01.2019, declaring nil income after claiming exemption of Rs. 22,81,20,000/- u/s 10(25) of the Act. Vide order dated 22,04.2021 u/s 143(3) r.w.s. 144B, the assessment was completed at an income of Rs. 22,81,20,000/- after disallowing the exemption claimed u/s 10(25) on account of belated filing of return of the assessee. 4. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A), who allowed the assessee’s appeal after making the following observations: “6,1 On perusal of the assessment order passed by ITO, Ward- 23(3)(4), Mumbai, for the A. Y. 2017-18 in the case of the above mentioned appellant/assessee provident fund, it is clearly noticed that the appellant/assessee had mentioned its "status" as a "TRUST" and the Ld. AO had, likewise, fully allowed the exemption claimed by the appellant/assessee for the said A.Y., le, 2017-18, It is also noticed from the assessment order for the above mentioned A.Y., 2017-18, that the appellant/assessee had not filed Form 10B/10BB. In the said order of assessment, the appellant/assessee had stated before the Ld. AO that the UTI Asset Management Company Limited Employees' Provident Fund is a fund set up to administer the provident fund of the employees of UTI AMC under the provisions of the Provident Fund Act, 1925. The entire income of the fund is exempt U/s. 10(25) of the I. T. Act, 1961. The appellant/assessee had P a g e | 3 A.Y. 2018-19 UTI Asset Management Company Ltd. Employees Provident Fund further stated that the fund is not a charitable trust or institution to which the provisions of Sec. 12A(b) of the Act, are applicable and hence the audit report in Form 10B/10BB was not required. Hence, the Ld. AO had passed the assessment order in the case of the appellant/assessee for the A.Y. 2017-18 preceding the present A.Y. 2018-19, as per its retumed income, fully allowing the amount exempt, as claimed by the appellant/assessee. In the present appellant's case for the A.Y., 2018-19 under appeal, it is apparent that the Ld. AO had disallowed the amount claimed by the appellant/assessee as exempt Uls. 10(25), i.e., Rs. 22,81,20,000/-pondering that it had filed its ROI (ITR 7) belatedly, i.e., the actual date of filing the said ITR 7 was 31/10/2018 and the appellant/assessee had filed the same on 24/01/2019. Considering this fact, the Ld. AO had fully disallowed the exempted amount claimed by the appellant/assessee to be exempt and in defence, the appellant/assessee had brought to light various juri ictional decisions, asserting in favour of itself. During the appellate proceedings, the appellant/assessee has claimed relief before the appellate authorities, requesting it to direct the Ld. AO, to delete the addition aggregating to Rs. 22,81,20,000/-made to the total income of the appellant/assessee in the assessment order, completely ignoring the claim of the appellant/assessee of the exemption U/s. 10(25) of the Act against its declared income of Rs. 'NIL.' It may be pertinent here to mention that even in some cases, Form 10 was not filed on time. Even in some cases, return filed U/s, 139(4) was treated as filed U/s. 139(1) of the Act, since deduction/exemption are some beneficial provisions, they should be construed liberally, in the eye of Law. This is the Cardinal Rule. We have to respectfully submit that provisions setting out the time limit should not work as punitive ones, so that the purpose behind the relief [claimed by appellant/assessee) should not be foiled. The provisions of Sec. 139(1) & 139(4) of the Act, have to be read together and on such a reading, the inevitable conclusion is that a return filed within time specified in sub-sec. (4) has to be considered as having been made within the time prescribed U/s. (1) 8 (2) of the Act, as laid out in the case of CIT V.S KULU VALLEY TRANSPORT CO. PVT. LTD. [77 ITR 1518]. 6.2 From a communication dated: 07/05/2024, it is seen that the appellant/assessee had requested the CIT(A), NFAC (NAC) ITD, Delhi, to kindly dispose off the appeal at the earliest since the Department is pressing it for payment of the outstanding tax demand. It had also requested the CIT(A) to kindly allow the appeal and delete the addition made by the Ld. AO; and not to pass any adverse order in the present proceedings. Keeping the above plea of the appellant/assessee in mind, it will not be out of way to refer to that in the instant case of the appellant/assessee, Fund represents income from investments which is made from such contributions. During the year ending March, 2018, relevant to the present A.Y. i.e., 2018-19, the appellant/assessee has earned interest income and income from sale of securities to the tune of Rs. 22,81,20,000/-. As per sub-clause (i) of clause (25) of Sec. 10 of the Act, any interest on securities which are held by or are the property of any provident fund to which the Provident Funds Act, 1925 applies, and any capital gains of the fund arising from the sale, exchange or transfer of such securities shall not be included while computing the total incorne of the appellant/assessee. Since, the appellant/assessee in question is a fund to which Provident Fund Act applies, income earned by it is exempt U/s. 10(25) of the Act.

Aggrieved with the order of Ld. CIT(A), the revenue is in appeal before the Tribunal. The sole ground of appeal is that the Ld. CIT(A) has wrongly allowed the claim of deduction u/s 10(25) to the assessee, for which it was mandatory that the return of income should be filed within the due date, and the assessee had filed its return on 24.01.2019, much after the due date of 31.10.2018. 6. Before us, Ld. DR has submitted that the decision of the Ld. CIT(A) is incorrect as for claiming the benefit of Section 10(25), the assessee should have filed the return within the due date. 7. On the other hand, Ld. AR has submitted that the assessee is not required to file any return, nor TDS was required to be deducted, as the impugned income is exempt u/s 10(25) of the Act, and does not form part of the total income. It has further been pointed out that in the previous and subsequent years, the assessee’s claim has been allowed by the Ld. AO. In this regard, Ld. AR has also drawn our attention to the CBDT Circular No. 18/2017 dated 29.05.2017, wherein it has been specifically provided that where income is unconditionally exempt u/s 10 and the assessee is not required to file a return of income as per section 139 of the Act, there would be no requirement for tax deduction at source since their income is anyway exempt. The assessee is fully

In view of the above factual and legal position, Ld. AR has submitted that the decision of Ld. CIT(A) is correct and deserves to be upheld. Ld. AR has further placed reliance on the decision of the High Court of Gauhati in the case of North Eastern Electric Power Corpn. Employees Provident Fund Trust v/s Union of India in W.P. (C) No. 85 (SH) of 2011 dated 16.12.2011 (2013) 31 taxmann.com 62 Gauhati, wherein it has been held as under: “The assessee-trust was being deprived of a sum for which it could not be blamed at all: it had no liability whatsoever to pay this amount to the revenue. Yet, the revenue had refused to refund the same by taking a hypertechnical view of the matter. The revenue does not dispute that the assessee trust has no liability whatsoever to pay the amount in question. Therefore, the revenue has not properly applied its mind to the facts of the case and has in the process completely overlooked the provisions of section 119(1)(b). True, no specific or express provision is engrafted in this section to deal with refund of TDS erroneously deducted when there is admittedly no due from the assessee, but then, this is precisely the reason, for enacting section 119(1)(b): this is in the nature of an inherent power granted to the Central Board of Direct Taxes to entrust any income-tax authority other than a Commissioner (Appeals) to admit an application or claim for refund even belatedly and dispose of the same in accordance with law.

We have heard the rival submissions and perused the material placed before us. We are of the considered opinion that the assessee is entitled to claim exemption u/s 10(25) of the Act, and is not even required to file its return for the purpose. Accordingly, the order of the Ld. AO denying the claim of deduction u/s 10(25) for the reasons that the return has been filed belatedly on 24.01.2019 as against the due date of filing of original return on 31.10.2018 is without any basis. We find no infirmity in the order of Ld. CIT(A), who has rightly deleted the addition and the same is, therefore, upheld. 10. In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 22.05.2025. BEENA PILLAI RENU JAUHRI (न्यधनयक सदस्य/JUDICIAL MEMBER) (लेखधकधर सदस्य/ACCOUNTANT MEMBER

विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file.