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Facts
The assessee, a charitable trust, claimed exemption under Section 10(23C)(via) for AY 2017-18. The CPC denied this exemption due to a procedural lapse in filing Form 10B, despite Form 10BB being filed. The assessee's rectification application was also rejected.
Held
The Tribunal held that the assessee had fulfilled the statutory requirements by filing Form 10BB within the due date and that the exemption claimed under Section 10(23C)(via) and Section 11 of the Act was allowable. The CPC erred in not rectifying the apparent mistake.
Key Issues
Whether the denial of exemption under Section 10(23C)(via) was justified due to the absence of Form 10B when Form 10BB was filed and the assessee consistently claimed the exemption.
Sections Cited
10(23C)(via), 12A, 143(1), 154, 11
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Income Tax Appellate Tribunal, A BENCH, PUNE
Before: Dr. MANISH BORAD & MS ASTHA CHANDRA
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER:
This appeal at the instance of revenue and cross objection by the assessee are directed against the order of Ld. ADDL/JCIT(A)-2 Vadodara u/s 250 of the Income-tax Act, 1961 dated 30.12.2024 which is arising out of Assessment & CO No. 27/PUN/2025 Order passed u/s.154 of the Act dated 12.07.2019 framed by Centralized Processing Centre, in short the CPC.
We will first take up the revenue’s appeal No. ITA 423/PUN/2025 wherein following grounds of appeal have been raised by the revenue:-
1. On the facts and circumstances of the case, the Ld. AddI/JGIT(A) has erred In allowing the appeal of the assessee despite the fact that the assessee failed to comply with the mandatory requirement of filing Form 108 for claiming exemption u/s 11 of the I.T. Act, 1961.
2. On the facts and circumstances of the case, the Ld. Addl/JCIT(A) has failed to appreciate that the assessee, while claiming exemption uls. 11 of the Act had bifurcated the application of Income under different heads such as revenue expenditure, capital expenditure, and accumulation of Income which shows the Intention of assessee to claim benefit u/s, 11 but did not file Form 10B as mandated under the provisions of the Act.
3. On the facts and circumstances of the case, the Ld. AddI./JCIT(A) has erred in overlooking the statutory obligation of filing Form 10B, which is an essential condition for claiming exemption u/s. 11 of the Act, irrespective of the submission of Form 10BB u/s. 10(23C)(via) of the Act.
4. On the facts and circumstances of the case, the Ld. Addl./JCIT(A) has failed to consider that the assessee had not claimed exemption uls 10(23C)(via) in its return of income for A.Y 2017-18 and as per the decision of the Hon'ble Supreme Court in Goetze (India) Ltd. v. CIT (284 ITR 323), an alternative claim cannot be entertained unless made in the original return or revised return.
5. On the facts and circumstances of the case, the Ld. Addl./JCIT(A) has failed to appreciate that the absence of Form 10B constituted a clear procedural lapse and as per judicial precedents, compliance with statutory requirements is mandatory for availing exemptions.u/s. 11 of the Act.
6. The appellant craves leave to add, alter or amend any or all the grounds of appeal.
Brief facts of the case are that the assessee is a charitable trust engaged in medical activities and duly registered u/s 10(23C)(via) of the Act and also u/s 12A of the Act. Return of Income for A.Y. 2017-18 e-filed on 12.10.2017 declaring NIL income after claiming exemption u/s 10(23C)(via) of the Act at Rs. 25,19,72,895/- This return was further revised on 02.04.2019 declaring same income and claiming same exemption. The return processed u/s 143(1) of the Act by the CPC on 27.03.2019 and the CPC denied the exemption claimed by the assessee. The ADIT, CPC computed the income at Rs. 25,19,72,895/- The assessee therefore filed rectification application u/s 154 of the Act stating about the & CO No. 27/PUN/2025 apparent mistake made in the intimation u/s 143(1) of the Act but assessee failed to get any relief as the CPC rejected the application vide order dated 12.07.2019 because the assessee claimed the exemption u/s 10(23C)(via) of the Act by claiming it the application of income u/s 11.
Aggrieved assessee preferred appeal before Ld. CIT(A) and provided requisite details alongwith the proof of claiming the exemption u/s 10(23C)(via) and also submitted that Audit report on Form 10BB has been duly submitted and that CPC erred in denying the benefit for non submission of Audit report on Form 10B. Ld. CIT(A) after carefully considering the submissions allowed effective grounds raised on merits of the case.
Aggreived revenue is now in appeal before this Tribunal.
Ld. Departmental Representative (DR) stated that the assessee made a mistake in filing the return of income and have wrongly claimed benefit u/s 11 of the Act. Assessee failed to furnish Audit report on Form 10B. In the absence of the Audit Report on Form 10B, CPC has rightly denied the exemption and there is no apparent mistake in the order u/s 143(1)(a) of the Act.
On the other hand Ld. Counsel for the assessee supporting the order of Ld. CIT(A) further submitted that the assessee has been consistently claiming exemption u/s 10(23C)(via) of the Act for past many years and the same has been allowed by the revenue authorities. Detail of such income tax returns for A.Y. 2015-16, 2016-17 and for A.Y. 2017-18 to 2024-25 stands filed in the paper book. He also & CO No. 27/PUN/2025 submitted that the Audit Report on Form 10BB stands submitted within statutory time limit.
We have heard rival contentions and perused the record placed before us. We observe that the assessee is a charitable Trust engaged in medical activities and is duly registered u/s 10(23C)(via) of the Act under the new scheme vide order dated 24.09.2021 and under the old scheme vide order dated 31.10.2007. The assessee is also registered u/s 12A under the old scheme vide order dated 29.09.1994 and under the new scheme vide order dated 24.09.2021. For the year under appeal, the assessee claimed exemption of Rs. 25,19,72,895/- u/s 10(23C)(via) of the Act and in the return of income in ITR 7 at page No. 1, assessee has mentioned about the detail of the projects/institutions run by it and there is also a reference about the exemption claimed u/s 10(23C)(via) of the Act. The assessee has also obtained the Audit Report on Form 10BB which is required for claiming deduction u/s 10(23C)(via) of the Act and the same stands e-filed on 12.10.2017. However due to inadvertent mistake committed at the time of filing return the amount of exemption which was to be claimed u/s 10(23C)(via) was wrongly mentioned in the column meant for claiming benefit u/s 11 of the Act towards the application of funds for charitable activities. Due to this mistake CPC made alleged addition because audit report on Form 10B was not filed on record.
We further find that Ld. CIT(A) after being satisfied that the assessee is eligible for deduction of the alleged sum both under section 10(23C)(via) as well as section 11 of the Act gave the relief to the assessee observing as under:- & CO No. 27/PUN/2025 7.2.2 Contention of the appellant is accepted and this ground off the appellant: Allowed 7.3 In Ground No. 2 to 5, the appellant has raised the issue of not granting exemption wis 10(23C)(vi) of the Act by not considering the Form 1088 fled by the appellant 7.3.1 In this regard, the appellant submitted that the assessee trust is dully registered ws: 101230vial of the Act as per order of CCIT, Pune dated 31.10.2007 and u/s 12A off Income Tax Act, 1967 as per registration order by CIT, Pune dated 29.09.1994. Accordingly, the entre income off the trust is exempt u/s 10(230)(via). Since the trust is claiming exemption u/s 10(230)(via) of the Income Tax Act, 1961, the necessary Audit Report in Form 108B has been duly filed along with the retum of income.
7.3.2 I have considered the appellant's submissions along with the rectification order passed under section 154 of the Income Tax Act. The appellant trust is registered under Section 12A of the Income Tax Act, 1961 and has declared a gross receipts of Rs. 25, 19,72,895/-, This includes Rs. 18,58,36,568/-as revenue expenditure, Rs.2,93,88,675/- as capital expenditure, which represent 85% of gross receipt and balance amount has been reported as accumulated amount.
7.3.2. The appellant filed its Return of Income (ROI) along with Form 10BB on 12.10.2017, significantly within the due date. The appellant has filed audit report in Form 10BB as per rule 16CC of Income-tax Rule. The same can be read as under.
ITA No.423/PUN/2025 & CO No. 27/PUN/2025
"16CC. Form of report of audit prescribed under tenth proviso to section 10(23C).
The report of audit of the accounts of a fund or trust or institution or any university or other educational institution or any hospital or other medical institution which is required to be furnished under the tenth proviso to clause (23C) of section 10 shall be in Form No. 10BB."
Considering that the appellant has timely filed the Return of Income (ROI) and Form 10BB, he is entitled to claim the exemption under Section 11 of the Income Tax Act, which governs the application of income for charitable purposes. As the appellant has met the statutory requirements and has provided the necessary documentation, the Assessing Officer (AO) is hereby directed to allow the expenditure claimed by the appellant, amounting to Rs.25,19,72,895/-, in accordance with the provisions of Section 11 of the Income Tax Act, 1961.
Hence, the appeal on this ground is Allowed.
In our considered view the above finding of Ld. CIT(A) needs no inference as the assessee is registered u/s 10(23C)(via) as well as section 12 of the Act and there is no dispute that the assessee is carrying out the activities as per the objects for which registration u/s 10(23C)(via) and section 12 have been granted. Assessee has also furnished audit report on Form 10BB which is required for claiming exemption u/s 10(23C)(via) of the Act. Our view is further supported by the decision of this tribunal in the case of ITO (Exemption Ward), Aurangabad Vs Savitribai Phule Shikshan Prasarak Mandal dated 17.01.2025. Therefore & CO No. 27/PUN/2025 since the assessee is eligible for exemption u/s 11 as well as 10(23C)(via) and audit report on Form 10BB stands duly furnished within the prescribed time limit, the CPC erred in not rectifying the apparent mistake stated by the assessee in the application u/s 154 of the Act. Thus no inference is called for in the finding of Ld. CIT(A). Grounds of appeal raised by the revenue are dismissed.
11. Now so far as cross objection raised by the assessee is concerned Ld. Counsel for the assessee fairly submitted that the said cross objection mearly supports the order of Ld. CIT(A). Considering the fact that we have already dismissed the revenues appeal assessee’s cross objection being supportive to finding of Ld. CIT(A) needs no adjudication and are dismissed being infructuous.
In the result both revenue’s appeal as well as assessee’s cross objection are dismissed.
Order pronounced on this 19th day of June, 2025.