DADASAHEB TIRODKAR SHAIKSHANIK ACADEMY,SINDHUDURG vs. ITOD EXEMPTION WARD, KOLHAPUR

Assessment Year: 2017-18 Dadasaheb Tirodkar V The Income Tax Officer, Shaikshanik Academy, s Exemption Ward, Pandurtitha Pandur, Kudal, Kolhapur. Sindhudurg – 416520. Maharashtra. PAN: AACTD5657Q Appellant/ Assessee Respondent / Revenue Assessee by Shri Nikhil Pathak & Shri Mayuresh Doshi – AR’s Revenue by Shri Eknath Abhang –Addl.CIT(DR) Date of hearing 23/07/2025 Date of pronouncement 30/07/2025 आदेश/ ORDER

PER DR. DIPAK P. RIPOTE, AM:

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) is not justified in confirming the denial of deduction u/s 11 or exemption u/s 10(23C) (iiiad) of the Act as the assessee is educational institute and eligible for due exemption.

3. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) failed to appreciate that non filing of Audit Report along with return of income is a procedural omission and cannot be an impediment in law in claiming the exemption.

5. The appellant craves, to consider each of the above grounds of appeal

without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal.” Findings & Analysis :

2. We have heard both the parties and perused the records. In this case, Assessee had filed Return of Income in ITR-7 on 08.10.2018 for A.Y.2017-18. Assessee is running an Educational Institution duly approved by University and other Government Authorities. Assessee had claimed exemption u/s.10(23C)(iiiad) of Rs.33,28,804/- and shown total income at Rs.NIL.

2.1 The relevant page of the Return of Income of the Assessee is scanned and reproduced here as under :

2.3 However, the ADIT(CPS) processed the Return of Income and disallowed the assessee’s claim. Assessee filed an appeal before ld.CIT(A). The ld.CIT(A) held as under :

“5.1.4 I have carefully considered the issue under dispute, and examined the same in the light of the provision of the statute. At the outset, as discussed above, in terms of provisions of sec. 12A(1)(b) of the Act r.w. Rule 17B of the Income Tax Rules, 1962 ("the Rules" for short), it is mandatory to furnish the statutory audit report along with the return of income filed by the assessee in terms of provisions of sec. 139(1) of the Act. Further, as per Rule 12(2) of the Rules, such audit report shall be furnished electronically. Accordingly, failure on the part of the assessee to furnish the audit report within the specified date would lead to disentitlement of the assessee from claiming exemption u/s. 11 of the Act. ...................... 5.1.6 In order to get entitlement for claiming exemption of its income u/s.11 of the Act, it is mandatory on the part of the appellant to file the Form No.10B in due time or get a condonation of delay in filing the Form 10B from the CIT(Exemptions). The AO cannot allow the deductions u/s. 11 / 10(23C) on facts and in circumstances of the law except when a Court directs under alternative remedy or the CIT(Exemptions) condones the delay u/s 119(2)(b) of the Act. Keeping in view of the above, I am of the opinion that the AO has rightly denied exemption u/s 11 / 10(23C) of the I.T. Act and rightly determined total income at Rs.33,28,804/-. Therefore, ground No.1, 2, 3 and 4 are dismissed.” 2.4 Thus, it can be noted that ld.CIT(A) referred to Section 12A and Rule 17B of the Income Tax Rules and held that since assessee has not filed Form 10B along with the Return of Income, Assessee is not eligible for deduction u/s.11/10(23C) of the Act. The Section 12A of the Income Tax Act is reproduced here as under : “Conditions for applicability of section 11 and 12. 12A. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:—

(a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Principal Commissioner or Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under section 12AA : Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of section 11 and 12 shall apply in relation to the income of such trust or institution,— (i) from the date of the creation of the trust or the establishment of the institution if the Principal Commissioner or Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) from the 1st day of the financial year in which the application is made, if the Principal Commissioner or Commissioner is not so satisfied: Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1st day of June, 2007; (aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form and manner to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA; Following clause (ab) shall be inserted after clause (aa) of sub- section (1) of section 12A by the Finance Act, 2017, w.e.f. 1-4- 2018 : (ab) the person in receipt of the income has made an application for registration of the trust or institution, in a case where a trust or an institution has been granted registration under section 12AA or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)], and, subsequently, it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, in the prescribed form and manner, within a period of thirty days from the date of said adoption or modification, to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA;

(b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. Following clause (ba) shall be inserted after clause (b) of sub- section (1) of section 12A by the Finance Act, 2017, w.e.f. 1-4- 2018 : (ba) the person in receipt of the income has furnished the return of income for the previous year in accordance with the provisions of sub-section (4A) of section 139, within the time allowed under that section. (c) [***] (2) Where an application has been made on or after the 1st day of June, 2007, the provisions of section 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made:

2.5 Thus, it can be noted that Section 12A of the Act, is applicable only for claiming deduction u/s.11 of the Act. However, in this case, Assessee has claimed exemption u/s.10(23C)(iiiad) of the Act. Section 10(23C)(iiiad) is reproduced here as under : Incomes not included in total income.

Ground No.4 : 4. Alternatively, ld.AR also pleaded that the entire receipts of Rs.33,28,804/- cannot be taxed which has been done by CPC. The Assessee had taken this plea before ld.CIT(A) also. We have perused the Return of Income filed by Assessee which contains Profit and Loss Account also. On perusal of the Profit and Loss Account, it is noted that after considering the expenditures, there is hardly any surplus. However, since we have held that Assessee is eligible for exemption u/s.10(23C)(iiiad), we do not intend to adjudicate this ground.

4.1 Since we have already adjudicated Ground No.1, we do not intend to adjudicate other grounds raised by the Assessee. Accordingly, Ground Nos.2, 3 and 4 are dismissed as unadjudicated.

4.2 Ground No.5 is general in nature, does not need any adjudication, hence dismissed.