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Facts
The Revenue appealed against the deletion of disallowance made by the AO regarding deemed application of funds under Section 11(2) of the Act, as Form 10 was filed after the due date for filing the return. The assessee filed its return belatedly, but claimed exemption later during assessment proceedings. Form 10 was also filed belatedly.
Held
The Tribunal held that the return filed under Section 139(4) of the Act is a valid return. The belated filing of Form 10 was considered a procedural delay and not a ground to deny exemption under Section 11(2) of the Act, especially when all other conditions were met. The Tribunal relied on various judicial precedents.
Key Issues
Whether belated filing of Form 10 and a belatedly filed return of income affects the claim for exemption under Section 11(2) of the Income Tax Act.
Sections Cited
11(2), 139(1), 139(4), 12A, 13(9), 143(1)(a), 251(1)(a)
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 09.06.2023 for the AY 2016-17.
The only issue raised by the Revenue is against the deletion of disallowance of ₹3,78,41,876/- by the ld. CIT (A) as made by the ld. AO in respect of deemed application u/s 11(2) of the Act, where the form no.10 was filed after the expiry of time allowed for filing the return of income u/s 139(1) of the Act.
The facts in brief are that the return was filed on 17.02.2017, declaring total income at ₹ Nil. The case of the assessee was selected
Assessee during the assessment proceedings submitted a revised computation on 11.01.2018, claiming therein the exemption u/s 11(2) of the Act to the tune of ₹3,78,41,876/-. The assessee also filed form no. 10 online on 29.08.2018, in respect of such accumulation. The assessee filed condonation petition for condoning the delay in filing the form no.10 on 15.11.2018. However, the same was dismissed by the ld. CIT(E) on 20.12.2018. Finally, the ld. AO assessed the income at ₹3,80,90,390/- by rejecting the claim of the assessee u/s 11(2) of the Act.
In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee by observing that section 13(9) of the Act was inserted by Finance Act, 2015, with effect from 01.04.2016, was not applicable to the instant assessment year and accordingly directed the ld. AO not to invoke the provisions of Section 13(9) of the Act and thus, directed the AO to delete the addition.
The ld. DR submitted before the bench that the ld. CIT (A) has given a wrong finding as to application of the Section 13(9) of the Act as brought by the Finance Act, 2015 by holding that the said section is applicable from A.Y. 2016-17 which was instant assessment year
On the other hand, the ld. Counsel for the assessee submitted that the return was filed by the assessee on 17.02.2017, though in the said return no claim was made as regards accumulation of income u/s 11(2) of the Act. The ld. Counsel for the assessee stated that the assessee during the course of assessment proceedings made its claim before the ld. AO and form no.10 was also filed on 29.08.2018. The ld. AR contended that the return filed on 17.02.2017, is a valid return within the meaning of Section 139 of the Act which include Section 139(1) of the Act as well as 139(4) of the Act. Therefore, even if the return is not filed within the due time u/s 139(1) of the Act, the same can be filed within the time limit u/s 139(4) of the Act. Moreover, filing of form no.10 is procedural lapse on the part of the assessee which was duly filed during the course of assessment proceedings itself. The ld. AR therefore, submitted that mere filing of form no.10 during the assessment proceeding cannot be a ground for denying the legitimate exemption u/s 11(2) of the Act, when all the conditions precedent for allowing such exemption have been fulfilled by the assessee. The ld. AR submitted that the activities of the trust are not in doubt and therefore, the exemption u/s 11(2) of the Act could not be denied on technicalities. The ld. AR in defense of his arguments relied on a series of decisions in case of M/s Susila Educational Trust Vs. ITO in order dated 30.08.2024 for A.Y. 2018-19, Shri MahudiMadhupuri Jain Vs. ITO in order dated 04.06.2024, CIT (Exemption) Vs. M/s Indian Sugar Mills Association in ITAT No. 270 of 2023, I.A. No. GA/1/2023 & GA/2/2023 order dated 10.01.2024, Association of Indian Panelboard manufacturer Vs. DCIT in R/Tax Appeal no.655 of
8. After hearing the rival contentions and perusing the materials available on record, we find that the return of income has been filed beyond the due date u/s 139(1) of the Act, however, it was filed well within the time allowed u/s 139(4) of the Act. We note that in the return filed u/s 139(1) of the Act, the assessee has not claimed exemption u/s 11(2) of the Act in respect of accumulations made, however during the course of assessment proceedings, a claim was lodged before the ld. AO by filing the revised consolidated computation of income. The assessee also filed the form no.10 for accumulation on 29.08.2018. Now the issue before us is whether the assessee is entitled to said exemption although the return as well as form no.10 has been filed belatedly. So far as the return of income filed on 17.02.2017is concerned ,we are of the view that the same is filed within the time limit allowed u/s 139 of the Act which includes the return filed u/s 139(1) of the Act as well as 139(4) of the Act. The case of the assessee is covered by the decision of the co-ordinate Bench in case of Shri Mahudi Madhupuri Jain Vs. ITO (supra), wherein the co-ordinate Bench held as under: - “7. The provision of Section 12A(1)(ba) of the Act was amended w.e.f. 01.04.2023 and the time allowed for the filing of return was prescribed as ‘within the time allowed under sub-section (1) of sub-section (4) of that section’. Thus, there is no doubt that for A.Y. 2023-24 onwards the time limit for filing of return of the trust includes not only the time limit for filing the original return u/s 139(1) of the Act but also the time as available for filing belated return u/s 139(4) of the Act.
The contention of the ld. AR is that the above amendment was only clarificatory in nature and that the return for the earlier years filed within the time limit u/s 139(4) of the Act also gets this benefit. On the other hand, the Ld. CIT-DR has contended that “4.3 The ld.AR argued that the CIT(A) failed to consider Circular No.2/2018 issued vide F.No.370142/15/2017-TPL dated 15.02.2018 explaining Finance Act, 2017 and the explanatory notes to the provisions of the Finance Act, 2017 and subsequent clarification issues by CBDT in F.No.173/193/2019-ITA-I dated 23.04.2019 with reference to time allowed for filing of return of income, subsequent to insertion of clause (ba) in sub-section 1 of section 12A of the Act. She produced the relevant copy “2.1. We have also gone through the cited judgment passed by the hon ITAT and find that the Coordinate Bench of ITAT, Kolkata in the case of Bangarh Educational Welfare Trust (supra) find that the facts of the case were that a Trust was granted registration u/s 12AA(b)(i) of the Act, return of income filed claiming deduction u/s 11 of the Act and the deduction of Rs. 1,35,87,109/- claimed by the assessee denied on the ground that the assessee failed to file the return before the due date and secondly audit report in Form-10B was not filed before the due date prescribed in this Act. The Hon'ble Member has after going over the Circular of CBDT and after discussing several judgments of the hon ITAT has passed the order in favour of the assessee. The operative portion of the aforesaid decision is as thus: "12. Now, the second reason for which lower authorities have denied the deduction u/s 11 of the Act is of filing the belated audit report on form 10B of the Act. Now, clause (b) of section 12A(1) of the Act provides for a condition that if the income of a trust exceeds a maximum amount which is not chargeable to tax in the previous year the account have to be audited and the person in receipt of such income furnishes the audit report before the specified date. In the case of the assessee, Form No.10B was to be filed and the relevant rule is rule 17B of the Income Tax Rules which provides that the report of audit of the accounts of a trust or institution which is required to be furnished under Clause (b) of section 12A, shall be in Form No.10B.
Now, on perusal of the Form 10B, we notice that the same is required to be submitted electronically, one month prior to the due date of the filing of return of income. Admittedly, in the case in hand, the audit report on form 10B has been uploaded on 30.03.2019 which is even after the date of filing the return of income on 15.11.2018. Now, before us, it has been contended by the ld. counsel for the assessee that filing of audit report is directory in nature and even if report is submitted in time before the conclusion of the assessment
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 24.02.2025.