SIDDHA SAKTHI ARUTJOTHI KALVI NILAYAM, ARIALUR, ,ARIYALUR vs. ITO, EXEMPTION WARD, TRICHY, TRICHY

1) The CIT(A) erred in upholding the denial of exemption claimed by the appellant u/s.11 of the Act as the Appellant is eligible for it.

2) The Appellant having inadvertently filed Form 10BB within the due date, the CIT(A) ought to have considered the Form 10B filed thereafter and allowed exemption claimed u/s. 11 of the Act.

3) The Appellant having filed its financials for the year before the CIT(A), the CIT(A) erred in failing to consider the same and allow exemption u/s.11

1) Without prejudice to the Appellant’s eligibility for exemption u/s.11 of the Act, the CIT(A) erred in failing to allow exemption u/s. 10(23C)(iiiab) of the Act.

2) Without prejudice to the Appellant’s eligibility for exemption u/s.11 and/oru/s.10(23C)(iiiad) of the Act, the CIT(A) erred in failing to allow exemption u/s. 10(23C)(iiiad) of the Act.

The facts in brief are that the assessee, is a trust, registered u/s.12A of the Act. For the A.Y.2018-19, the assessee filed its Return of Income (ROI) on 27.08.2018 claiming NIL income. It also filed its audit report on the same day in Form 10BB, which is applicable to section 10(23C)(vi) of the Act. The assessee filed a revised ROI on 04.03.2019, again declaring NIL income. The AO, CPC issued a communication dated 04.12.2019 proposing disallowance of exemption of Rs.68,06,464/- for 3 reasons; a. The assessee failed to specify the clause of section 10 under which exemption is claimed, b. The exemption claimed is more than the aggregate of receipts declared in the ROI, and c. The trust being registered u/s.12A/12AA, it cannot claim exemption under any clause of section 10 except for (1) and (23C). 4. The AO, CPC then passed the order u/s.143(1) dated 04.03.2020, by denying the exemption claimed and assessing the income at Rs.68,06,464/- for the above-mentioned reasons. 5. Later the assessee filed its audit report in Form 10B (applicable for claiming exemption u/s.11 of the Act) on 28.11.2022. The assessee also filed a condonation petition with the ld.CIT(E) to condone the delay in filing the audit report, which ultimately the ld.CIT(E) rejected as the delay was more than 365 days. The assessee then filed a condonation petition with the CBDT on 11.03.2023, which the Ld. AR submitted that it is pending for disposal.

Challenging the order u/s.143(1) dated 04.03.2020, the assessee filed an appeal with the ld.CIT(A) on 09.12.2024. It filed detailed submissions, which has been extracted by the ld.CIT(A) in his order dated 26.12.2024. The ld.CIT(A) dismissed the appeal by observing that the ld.CIT(E) had already refused to condone the delay in filing the audit report and thus he dismissed all the grounds raised by the assessee. Aggrieved by the order of the ld.CIT(A) the assessee is in appeal before us. 7. The Ld. AR for the assessee submitted that the assessee is having registration u/s.12A and is thus entitled to exemption u/s.11 of the Act. According to him, the reasons for which the AO has disallowed the exemption are all technical reasons, arising due to clerical errors. He submits that the assessee is eligible for exemption u/s.11 of the Act and the only default is that the audit report was filed beyond the specified due date and even the filing of the audit report before the due date was only directory and not mandatory. He submitted that the audit report was filed on 28.11.2022 and so the assessee was to be given the benefit of exemption u/s.11 of the Act. 8. The Ld. AR alternatively argued that, if at all the exemption u/s.11 is not available, the assessee is eligible for exemption u/s.10(23C)(iiab) and also 10(23C)(iiiad) of the Act. He further submitted that he had filed detailed submissions on his alternative claims of exemption/s u/s.10(23C)(iiiab) and also 10(23C)(iiiad), but the ld.CIT(A) had not adjudicated the same. Finally, he argued that if none of the exemptions are available at all, it is only the net income of the assessee that can be taxed against the gross receipts taxed. 9. The Ld. DR on the other hand supported the orders of the lower authorities and prayed for upholding the same. 10. We have considered the rival arguments and perused the materials available on record and gone through the orders of the authorities. The assessee is a trust registered u/s.12A of the Act. The claim of exemption of the assessee was denied for the 3 reasons as reproduced above in our order. As rightly submitted by the Ld.AR, the exemption has been disallowed for incorrectly

अपीलाथ&/Appellant 2. '(थ&/Respondent 3.आयकर आयु./CIT– Chennai/Coimbatore/Madurai/Salem 4. िवभागीय 'ितिनिध/DR 5. गाड$ फाईल/GF