M/S. ALTERNATIVE INDIA FOR DEVELOPMENT,CHENNAI vs. ITO, EXEMPTION WARD-4, CHENNAI

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ITA 2114/CHNY/2024Status: DisposedITAT Chennai22 January 2025AY 2016-17Bench: SHRI SS VISWANETHRA RAVI (Judicial Member), SHRI AMITABH SHUKLA (Accountant Member)5 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal, relying on various High Court and coordinate bench decisions, held that the filing of Form-10B is merely a directory requirement and not a mandatory condition. It concluded that belated submission does not disentitle the assessee from claiming exemption under Section 11. Consequently, the order of the Ld. CIT(A) was set aside, and the Assessing Officer was directed to allow the exemption claim.

What were the facts?

The assessee, a trust, was denied deduction under Section 11 of the Income Tax Act by the Revenue for the assessment year 2016-17 due to the non-submission of Form-10B. Although the audit report (ITR 7) was filed on 08.10.2016 and the audit was completed on 01.09.2016, Form-10B was filed belatedly before the appellate authority.

What were the issues?

Whether the belated filing of Form-10B is a mere procedural requirement or a mandatory condition for claiming deduction under Section 11 of the Income Tax Act, and if its non-submission before the due date disentitles the assessee from exemption.

Which sections of the Income-tax Act were involved?

Section 11,Section 11(2),Section 12,Section 139(1),Section 250

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: SHRI SS VISWANETHRA RAVI & SHRI AMITABH SHUKLA

Hearing: 07.01.2025Pronounced: 22.01.2025

Years: 2016-17 M/s.Alternative India for Development The Income Tax Officer, No.1, Vgn Nagar, Iyyappanthangal, Exemption Ward(4), Kattupakkam Post, Chennai. Chennai-600 056. [PAN: AAATA4184H] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant) अपीलार्थी की ओर से/ Assessee by : Shri D.Anand & Mr.P.Hari, Advocates. प्रत्यर्थी की ओर से /Revenue by : Ms.E.Pavuna Sundari, Addl.CIT सुिवाई की तारीख/Date of Hearing : 07.01.2025 घोर्णा की तारीख /Date of Pronouncement : 22.01.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M :

This appeal is filed against the order bearing DIN & Order No.ITBA/APL/S/250/2024-25/1066189357(1) dated 28.06.2024 for the assessment years 2016-17. Through the aforesaid appeal the assesse has challenged order u/s 250 dated 28.06.2024 passed by Addl/JCIT(A)- 2, Gurugram. 2.0 The only issue seminal to the controversy is as to whether furnishing of Form-10B is mandatory for claim of deduction u/s 11 to the assessee. The assessee is contesting denial of deduction u/s 11 to it by the Revenue on the premise of non-submission of Form-10B. The Ld. Page - 1 - of 5 Counsel for the assessee representing the assessee trust informed that the assessee had filed his return of income using ITR 7 on 08.10.2016. It was submitted that the audit report was done on 01.09.2016. Admittedly Form-10B could not be filed, though the same was filed later before the appellate authority. 3.0 We have heard the rival submissions in the light of material available on records. The Ld. DR placed reliance upon the order of the lower authorities. It is the case of the assessee that filing of Form-10B is merely a directory exercise and not a mandatory requirement. In support of its contentions, the Ld. Counsel for the assessee has relied upon the decisions of Hon’ble Madras, Bombay and Gujarat High Courts and Hon’ble Coordinate benches of this tribunal as well as those emanating from Delhi Benches, Ahmadabad Benches, Bangalore Benches. Thus, our attention is drawn to the decisions of of Chennai in the case of Kaakkum Karangal, of Delhi in the case of Rajdhani Maitri Club Foundation, ITA No.209/Ahd/2022 of Ahmedabad in the case of Gujarat Energy Development Agency, ITA No.3657/Del/2023 of Delhi in the case of Bhagwant Kishore Memorial Educational Society, ITA No.1396/Bang/2024 of Banglore in the case of M/s.Sarvadeivatha Education Trust and ITA No.695/Ahd/2023 of Ahmedabad in the case of Anjana Foundation Vadodara and of Hon’ble Gujarat High Court decision

Page - 2 - of 5 Indian Panel Board Manufacturer v. DICT (ITA No.655 of 2022 dated 21.03.2022), decision of the Hon’ble Madras High Court in the case of Chandraprabhuji Maharaj Jain v. DCIT reported in 110 Taxmann.com 11, decision of the Hon’ble jurisdictional High Court in the case of CIT v. SPIC Educational Foundation (TCA No.1593 of 2008 dated 12.12.2018 and of Hon’ble Bombay High Court in the case of Xavier Mandel Pvt Ltd. As regards decision of Hon’ble Coordinate bench of this tribunal in the case of Kakkum Karangal the following was held:- “….10. For completeness, we make it clear that the Ld.CIT(A) erred in rejecting the appeal preferred by the assessee on a ground which was not raised/flagged by the CPC i.e. delay of less than one month in filing / uploading of Audit Report. In this context, it is noted that such an issue is no longer res integra i.e. filing of Form 10AB (Audit Report) would be directory in nature and as such if the assessee files the Audit Report before completion of assessment, then, the same should be considered by the Income Tax Authorities for processing of the assessment/appellate order (refer the Hon’ble Gujarat High Court decision in the case of Indian Panel Board Manufacturer v. DICT (ITA No.655 of 2022 dated 21.03.2022) and also the decision of the Hon’ble Madras High Court in the case of Chandraprabhuji Maharaj Jain v. DCIT reported in 110 Taxmann.com 11; and also the decision of the Hon’ble jurisdictional High Court in the case of CIT v. SPIC Educational Foundation (TCA No.1593 of 2008 dated 12.12.2018), wherein the Hon’ble High Court has held that filing of Form 10 for accumulation of income u/s.11(2) of the Act which was filed beyond due date couldn’t disentitle the trust from exemption claimed u/s.11 of the Act. The Hon’ble Court directed the AO to examine the benefit of admissibility rather than to foreclose the claim of assessee on technicalities. Therefore, respectfully taking note of the binding decision of the Hon’ble High Court (supra), we hold that the Ld.CIT(A) erred by misdirecting on an issue which wasn’t raised by CPC; and since the TAR had been filed while the CPC was processing the RoI, it rightly didn’t raise any objection on belated filing of TAR, and therefore the First Appellate Authority erred in passing the impugned order, which we set

Page - 3 - of 5 aside and direct granting exemption claimed by the assessee u/s.11 of the Act….” 3.1 We have noted that Hon’ble Delhi Tribunal in its latest decision in the case of Rajthani Maithri Club Foundation vide dated 21.11.2024 has ruled as under: “….3. Suffice to say, the substantive issue between the parties herein appears to be that of correctness of learned lower authorities’ action in disallowing the assessee section 11 exemption claim on the ground that it had belatedly filed its form 10B audit report dated 22.09.2022 than the due date of filing return u/s 139(1) of the Act. The Revenue’s case is that this tax audit report compliance is a mandatory provision for an assessee who claims section 11 exemption.

4.

We note in this factual backdrop that the instant issue is no more res- integra in light of ACIT v. Xavier Kelvani Mandal Pvt. Ltd. (Gujarat), wherein their lordships have already settled the same at rest in assessee’s favour and against the department that such a compliance could be even made in first appellate proceedings before the CIT(A)/NFAC. I thus accept the assessee’s instant sole substantive grievance in principle and direct the learned CIT(A)/NFAC to readjudicate the lower appeal on merits as per law preferably within three effective opportunities subject to a rider that it shall be the taxpayer’s risk and responsibility only to plead and prove all the relevant facts within three effective opportunities in consequential proceedings. Ordered accordingly….” 4.0 We have also noted with respectful deference the decision of Hon’ble Bombay High Court in the case of Xavier Mandel Pvt Ltd holding that “in order to claim exemption u/s 11, the assessee can file audit report in Form-10B even at later stage either before the assessing officer or appellate authority…” 5.0 Thus, we find force in the argument of the assessee that filing of Form-10B along with return of income is a mere procedural requirement and not a statutory mandate, absence of which would disentitle an Page - 4 - of 5 11 & 12 of the act. In respectful compliance to the decisions of Hon’ble Coordinate Benches including those delivered by this tribunal as well as decisions of Hon’ble Madras, Gujarat and Bombay High Court supra, we are inclined to hold that the filing of Form-10B is merely directory in nature. Thus, the order of the Ld.CIT(A) is not justified and set aside. We direct the Ld. AO to allow the claim of exemption u/s 11 of the act. Accordingly, all the grounds appeal raised by the assessee are allowed.

6.0 In the result, the appeal of the assessee is allowed. Order pronounced on 22nd, January-2025 at Chennai. Sd/- Sd/- (यस यस नवश्विेत्र रनव) (श्री अनमताभ शुक्ला) (SS VISWANETHRA RAVI) (AMITABH SHUKLA) न्यानयक सदस्य / Judicial Member लेखा सदस्य /Accountant Member चेन्नई/Chennai, नदिांक/Dated: 22nd , January -2025. KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Chennai 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF

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