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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
ORDER PER GAGAN GOYAL, A.M: This appeal by Revenue is directed against the order of National Faceless Appeal Centre, Delhi [for short ‘NFAC’] passed under section 250 of the Income Tax Act, 1961 [for short ‘the Act’] vide order dated 29.03.2022 for Assessment Year (AY) 2016-17. The Revenue has raised the following grounds of appeal:
1. Whether, on the facts and in the circumstances of the case and in law the Ld CIT(A) erred in allowing the condonation for Return of Income when only condonation for late filing of Form 10B was given by Commissioner of Income Tax(Exemption) vide order dated 21.08.2020". 2. "Whether on the facts of the case and in law the Ld. CIT (A) erred in allowing accumulation u/s 11(2) of the Income-tax Act, 1961(the Act) when Return of Income was filed u/s 139(4) of the Act and thus exemption u/s 11(2) of the Act was not allowed as per u/s 139(9) of the Act" 3. "Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in allowing the exemption when the purpose for accumulation is very general for carrying out the purpose of the trust/association/institution i.e. to help needy to educate the wards provides education facility from KG to post graduation level when the statute allow accumulation only for specific purpose u/s 11(2) of the Act and accumulation for general purpose is restricted to only 15% as per the provisions of section 11(1)(a) of the Act. 4. "Whether on the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in allowing the generic purpose in Form 10 when section 11(3) of the Act allows the change of purpose stated for accumulation u/s 11(2) of the Act implying the intention of legislature that purpose in Form 10 has to be specific and not general."
Brief facts of the case are that the assessee is a trust registered with the director of income tax (exemption, Mumbai u/s 12A vide registration no. Gg(a)/94 dated 02-08-1977 and u/s 80G of the income Tax Act. 1961. The case was selected for scrutiny and assessed u/s 143(3) vides order dated 13-12-2018.
Assessee filed its return of income on 27-03-2017 and falls in the category of belated return. AO further observed that not only ITR but also form no. 10B filed late. In consequence to this AO applied sec 13(9) and refuse to allow exemption as granted u/s 11(2). In result of this an addition of Rs. 1, 91, 45,951/- was made in the hands of assessee. Moreover, AO objected the accumulation done by the assessee as no specific reason/object specified and in his view accumulation can be done u/s 11(2) for a specific reason and not for any general purpose. Aggrieved with this order of AO assessee preferred an appeal before the Ld. CIT (A).
Ld. CIT (A) in his order u/s 250 allowed the appeal of the assessee and granted relief against additions made by the AO.
Being aggrieved with the order of Ld. CIT (A) revenue has preferred this appeal before ITAT. 6. We have gone through the order of AO, the order of Ld. CIT (A), submissions of the assessee and paper-book along with case laws relied upon. Assessee is an educational institution existing solely for educational purposes and not for the purpose of profit. The main purpose of the trust is to promote education without any distinction as to caste, creed or religion and the attainment of the above project. Assessee has as many as 60 units such as Montessori, Pre-Primary, Primary, Secondary Schools, Junior Colleges, Degree and Technical Colleges etc. 7. The accounts of the trust and all the units are consolidated at the registered office of the trust. In December 2015 assessee’s accounting software crashed resulting in loss of data. Considerable time was taken in recovering the historical data and it’s a common phenomenon in such type of situation. Thereafter, the data for F.Y. 2014-15 was provided to auditor for verification. Post finalisation of audit for F.Y. 2014-15, the accounting for 2015-16 Started, thereby resulting in delay of finalisation of accounts for F.Y. 2015-16. the same was finalised and signed on 06-03-2017. Hence the audit report in form no. 10B dated 06-03-2017 was uploaded on 27-03-2017. Since the trust is registered under Bombay Public Trust Act, 1950 the audited financials are required to be filed with the Charity Commissioner. Due to delay in filing the audited financials, the assessee had filed an affidavit with the office of the Charity Commissioner also along with an application for condonation of delay.
These facts had been conveyed to the AO also vide letter dated 05-12-2018. However, AO was satisfied. We further observed, to overcome this deficiency assessee has filed an application for condonation of delay in filing Form No. 10B with the Ld. Commissioner of Income Tax (Exemption) on 30-11-2018. Copy of the same was submitted with the office of AO also vide letter dated 05-12-2018. Ld. Commissioner of Income Tax (Exemption) condoned the delay vide order No. ITBA/COM/F/17/2020-21/1027770791(1), Dated: 21-008-2020.
So the first objection of the AO was duly met, far before passing the assessment order vide order of Ld. CIT (EXEMPTION) mentioned (supra). The next objection of AO pertains to the fact that assessee had written very general purpose regarding accumulation u/s. 11(2), which is “for carrying out the purposes of the trust, i.e. to help needy students to educate the wards. Provide quality education facility from KG to Post Graduate level.”
It is observed that AO issued the show cause notice Dated: 30-11-2018 on the ground of late filing of ITR and Audit Report in Form No. 10B, however in the assessment order, denied benefit u/s. 11(2) on the ground of specifying very general purpose for accumulation in Form No. 10B.
On this objection of the AO, it is observed that in the preceding years, viz A.Y. 2013-14 AND 2015-16, the assessee had filed Form No. 10B with similar language and the same has been duly accepted by the then AO in the assessment proceeding under scrutiny.
Assessee relied up on following case laws in its favour: 1). Arhatic Yoga Ashram Management Trust vs. ITO (E) (2021) 126 TAXMANN.COM 76 (Chennai-Trib) 2). CIT (E) vs. Bochasanwasi Shri Akshar Purushottam Public Cable Trust (2019) 105 TAXMANN.COM 97 (SC.) 3). DIT (E) vs. Envisions (2015) 58 TAXMANN.COM 184 (Kar.) 13. We have considered the judicial pronouncements relied up on by the assessee and found the same to be relevant on the facts of the case. Where all purposes specified by assessee trust in Form No. 10 are for achieving charitable objects of trust, merely because more than one purpose have been specified and details about plan of such expenditure has not been given, same would not be sufficient to deny benefit under section 11(2) to the assessee. 14. We found no force in the appeal of the revenue; hence order of Ld. CIT (A) is sustained. 15. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open court on 19th day of December, 2022.