ROUBLE NAGI ART FOUNDATION ,MUMBAI vs. ITO (EXEM). WARD 2(2), MUMBAI

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ITA 1271/MUM/2025Status: DisposedITAT Mumbai30 April 2025AY 2017-183 pages
AI SummaryAllowed

What did the Tribunal hold?

The ITAT held that the assessee is entitled to the benefit of application of income under section 11 of the Income Tax Act, 1961. The Tribunal found no dispute on the facts, and the sole contention was the delay in the approval of Form 10B. The Tribunal noted that in a series of decisions, it has been held that even if Form 10B is filed during assessment proceedings, the assessee is entitled to the benefit of section 11. Therefore, the appeal of the assessee was allowed. The operative direction is that the appeal of the assessee is allowed, implying that the exemption under section 11 should be granted.

What were the facts?

The assessee, Rouble Nagi Art Foundation, a charitable trust registered under section 12AA of the Income Tax Act, 1961, filed its return of income for Assessment Year 2017-18 on July 28, 2017. The trust obtained its audit report in Form 10B on October 30, 2017, and it was approved by the Trustees on March 28, 2018. The Centralized Processing Centre (CPC), Bangalore, denied the exemption under section 11 of the Act due to the delay in filing Form 10B. The Commissioner of Income Tax (Appeals) confirmed the CPC's action. The assessee appealed this decision to the Income Tax Appellate Tribunal (ITAT). The amount in dispute is Rs. 17,82,350/- being the entire income taxed, with a deduction of Rs. 19,00,295/- denied.

What were the issues?

1. Whether the assessee is entitled to exemption under section 11 of the Income Tax Act, 1961, when Form 10B was not filed within the due date, and if the denial of exemption by the CPC and confirmation by the CIT(A) is justified. Assessee's contention: The assessee argued that it is a charitable trust with undisputed objects and activities. While Form 10B was filed within an extended period, its approval by the Trustees was delayed due to non-availability. The assessee relied on various decisions of the Tribunal and High Courts holding that exemption under section 11 should not be denied on technical grounds for delayed filing of Form 10B, especially when filed during assessment proceedings. They cited Mumbai Metropolitan Regional Iron & Steel Market Commodity, Laxmanarayayan Dev ShrishanSeveaKhendra, Association of Indian Panel Board Manufactured, Sarvodaya Charitably Trust, Shree BhairavSevaSamiti, and RamasahanimalSahuwala& Sons Charitable Trust. Revenue's contention: The revenue, represented by the Sr.DR, supported the orders of the lower authorities, admitting that there was a delay in filing Form 10B.

Which sections of the Income-tax Act were involved?

Section 11,Section 12AA,Section 254(1)

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Cases cited in this judgment(5)Show list

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2017-18) (Physical hearing) Rouble Nagi Art Foundation v. ITO (EXEMPTION)-WARD-2(2) Mumbai 603A Foreshore Apartment Juhu Beach, Juhu Road Mumbai - 400049 PAN. AABTR9167Q (Appellant ) (Respondent) Assessee Represented by : Shri JayeshDadia CA Shri Vijay Kr. G. Subramanyam, Sr.DR Department Represented by : Date of Conclusion of hearing : 22.04.2025 Date of Pronouncement of Order : 30.04.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER;

1.

The appeal by the assessee is directed against order of CIT(A) / ADDL / JCIT(A)–6, Delhidated 29.01.2025 for the A.Y. 2017-18. The assessee has raised the following grounds of appeal: -

1. The Ld. Commissioner of Income Tax (Exemption) has erred in law and on the facts of the case in confirming action of the CPC of denying exemption u/s 11 of the act on the ground that Form No.10B was not filed within the due date.The action in unjustified and unwarranted.

2. The Ld. Commissioner of Income Tax (Exemption) has erred in law and on the facts of the case in confirming action of the CPC of taxing entire income of Rs.17,82,350/- and not allowing deduction of Rs.19,00,295/-. The action in unjustified and unwarranted.

3. Your Petitioners craves leave to add, amend, alter and / or withdraw the aforesaid ground of appeal.”

2. Rival submissions of both the parties have been heard and record perused. The Learned Authorised Representative (Ld.AR) of the assessee submitted that assessee is a Charitable Trust and registered under Charitable Commissioner and also having valid Registration under section 12AA of the (AY: 2017-18) Rouble Nagi Art Foundation Income Tax Act, 1961 (in short “Act”). The object and activities of the assessee is not in dispute. Assessee filed its return of income for the A.Y. 2017-18 on 28.07.2017. The assessee also filed report in Form 10B within extended period on 07.11.2017. The report in Form 10B was also obtained before due date, however, the same couldnot be approved by Trustees due to non-availability. It was approved only on 28.03.2018. The Centralized Processing Centre, Bangalore (in short “CPC”) while processing the return of income not allowed the benefit of section 11 of the Act about application of income. The Ld.CIT(A) confirmed the action of the CPC by taking view that return was filed on 28.07.2017, audit report was obtained on 30.10.2017, it was approved by Trustee on 28.3.2018 resulting insignificant delay. The Ld.AR of the assessee submitted that in a number of decisions the various benches of Tribunal and Higher Courts have held that when the assessee Trust has complied with the procedural requirement of obtaining and filing report in Form 10B, exemption under section 11 of the Act could not be denied to it merely on technical ground for not filing of Form 10B along with return of income. Further in a series of decisions the various trusts have been allowed benefit of section 11, when Form 10B is filed during the assessment proceedings. To support his submission, Ld.AR of the assessee relied upon the following decisions: -

 Mumbai Metropolitan Regional Iron & Steel Market Commodity (378 ITR 103)  Laxmanarayayan Dev ShrishanSeveaKhendra (167 taxmann.com 548)  Association of Indian Panel Board Manufactured (157 taxmann.com 550)  Sarvodaya Charitably Trust (125 taxmann.com 75)  Shree BhairavSevaSamiti (149 taxmann.com 478)

3.

On the other hand, the Learned Senior Departmental Representative (Sr.DR) for the revenue supported the orders of lower authorities. Sr.DR submitted that admittedly there was delay in filing report in Form 10B.

4.

I have considered the submissions of both the parties and gone through the orders of lower authorities carefully. I found there is no dispute on facts. Only bone of contention of parties is that report in Form 10B was approved on 28.03.2017. I found that in a series of decisions it has been held that even if Form 10B is filed during assessment, the assessee is entitled for the benefit of application of income under section 11 of the Act. Thus, the appeal of the assessee is allowed.

5.

In the result, appeal of the assessee is allowed.

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