SHREE VARDHMAN STANAKVASI JAIN SHRAVAK TRUST,AHMEDABAD vs. THE ITO, WARD-3(2)(1), AHMEDABAD
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld.
CIT(A)”), ADDL/JCIT(A)-1, Gurugram vide order dated 30.08.2024
passed for A.Y. 2020-21. 2. The assessee has taken the following grounds of appeal:-
“1. The order passed by lower authorities is bad in law and required to be quashed.
Ld. NFAC erred in law and on facts in treating corpus donation of Rs. 17,96,000/- as voluntary donation.
Ld. NFAC erred in law and on facts in not allowing application of income Rs. 49560/- while computing income. Asst.Year –2020-21 - 2–
Ld. NFAC ought to have computed income of the trust on commercial principle.
Ld. NFAC ought to have considered fact that filing of Form 10B is not applicable to appellant trust.
Ld. NFAC ought to have considered fact that filing of Form 10B is directory in nature and not mandatory as per various judicial precedents.
Charging of Interest u/s 234A, 234B, 234C are unjustified.”
The brief facts of the case are that the assessee is a trust registered under Section 12A of the Act. During the year under consideration, the assessee trust received donation of Rs. 17,96,000/- for building fund and the same was treated as corpus donation, and claimed as exempt from tax since it was specifically ear-marked as corpus donation and the said amount was not offered as income by the assessee. Subsequently, the assessee trust purchased building for the objects of the trust. In the return of income filed by the assessee, the aforesaid amount was disclosed as corpus donation only. However, the CPC, by way of adjustment under Section 143(1) of the Act, treated this amount as income of the assessee and subjected the same to tax in the hands of the assessee.
The assessee filed appeal before Ld. CIT(A) and took various contentions. The assessee submitted that CPC acted beyond the scope of Section 143(1) of the Act by treating such corpus donation as voluntary donation and subjecting the same to tax in the hands of the assessee. The assessee submitted before JCIT(A) that treatment of such corpus donation as voluntary donation is outside the scope of adjustments given under Section 143(1) of the Act and such addition does not fall in any of the adjustments enumerated under Section 143(1)(a)(i) to (vii) of the Act. Asst.Year –2020-21 - 3–
Accordingly, the assessee requested the JCIT(A) to delete the corpus donation of Rs. 17,96,000/-. However, the JCIT(A) dismissed the appeal of the assessee by holding that from the documents available on record, the assessee filed it’s return of income for the year on 31.05.2021, which was beyond the due date of filing return of income, (which was 15.02.2021). Further, JCIT(A) observed that the assessee had not filed
Form 10B, which the assessee was required to do, if the total income of the Trust without giving effect to the provision of Sections 11 & 12
exceeds the maximum amount which is not chargeable to tax. The JCIT(A) held that failure to furnish such Audit Report in Form 10B within the prescribed Form, results in disentitlement of the trust from claiming exemption under Section 11 & 12 of the Act. Accordingly, the adjustments made by CPC were upheld by Ld. CIT(A).
The assessee is in appeal before us against the aforesaid order passed by Ld. JCIT(A).
Before us, the Counsel for the assessee submitted that the assessee had filed the Audit Report “physically” on 18.10.2022 (Acknowledgement has been attached before us for our perusal). Secondly, the Counsel for the assessee also took an argument that the assessee was not under any obligation to file Form 10B, since the income of the assessee was below the taxable limit. The Counsel for the assessee drew our attention to the Paper Book of the assessee as per which the gross income of the assessee was Rs. 79,000/- only and hence the same was below the minimum limit which was chargeable to tax. Accordingly, it was submitted that clearly Asst.Year –2020-21 - 4–
the assessee was not under an obligation to file Form 10B, looking into the assessee’s facts. The Counsel for the assessee drew our attention to Section 139(4A) of the Act, and submitted that if the income of the assessee is below the prescribed taxable limit, then the assessee was not under an obligation to file return of income in the first place. Accordingly, the Counsel for the assessee submitted that neither was the assessee under an obligation to file return of income nor was the assessee under an obligation to submit Form 10B and therefore, no additions were called for in the instant set of facts. Further, the Counsel for the assessee placed reliance in the case of Shree Swaminarayan Charitable Trust vs. ITO in ITA No. 1106/Ahd/2024, wherein the ITAT is held that the late submission of Form 10B is a procedural default and once the assessee has subsequently filed Form 10B, additions cannot be made in the hands of the assessee on account of non-filing of Form 10B within the prescribed time.
In response, the Ld. D.R. placed reliance on the observations made by JCIT(A) in the appellate order.
We have heard the rival contentions and perused the material on record.
On going through the facts of the instant case, we observe that the adjustments made by CPC have been confirmed by the JCIT(A) on three grounds. Firstly, the assessee had not filed the return of income within the prescribed time limit. Secondly, the assessee had not filed Form 10B within the prescribed time limit. Thirdly, this addition was permissible by Shree Vardhman Stanakvasi Jain Shravak Trust vs. ITO Asst.Year –2020-21 - 5–
way of adjustment under Section 143(1) of the Act. Therefore, on account of the above reasons, the assessee was not eligible for grant of exemption under Sections 11 & 12 of the Act, and hence the corpus donation was liable to be taxed as income in the hands of the assessee. In response, the Counsel for the assessee submitted before us that in the return of income, it was specifically submitted that such amount of Rs. 17,96,000/- received by the assessee was a voluntary donation and not a corpus donation.
Secondly, since the income of the assessee, as per the Profit & Loss account, was below the taxable limit, the assessee trust was not under an obligation to file return of income and therefore, also not an obligation to file Form 10B as well. Thirdly, delayed filing of Form 10B is a procedural defect and since the assessee trust had filed the same before Ld. JCIT(A) during the course of appellate proceedings, no disallowance was called for on account of late filing of said Form 10B.
On going through the various adjustments which have been incorporated under Section 143(1) of the Act, we are of the considered view that treatment of such corpus donation as voluntary donation falls outside the scope of adjustments contemplated under Section 143(1) of the Act, unless such incorrect claim is apparent from any information in the return of income. In the return of income filed by the assessee, such donation of Rs. 17,96,000/- was specifically treated as corpus donation and not as voluntary donation. Accordingly, in our considered view, treatment of corpus donation as voluntary donation falls outside the scope of adjustments contemplated under Section 143(1) of the Act. Secondly, we Asst.Year –2020-21 - 6–
observe that in the case of Shree Swaminarayan Charitable Trust vs.
ITO in ITA No. 1106/Ahd/2024, wherein the ITAT has made the following observations:
“3. The issue before me pertains to delayed submission of Form no.10B which ld.counsel for the stated to be a technical default. He further submitted that ld.Bench of the ITAT, Ahmedabad rejected similar claim in the case of Association of Indian
Panelboard Manufacturer Vs. DCIT, ITA No.24 of 2022. However, the said decision of the ITAT was reversed by the Hon'ble Juri ictional High Court by judgment dated
21.3.2023 reported in (2023) 157 taxmann.com 550 (Guj) holding that w.e.f. Astt.Year
2016-17 filing of form though mandatory in nature but procedural in nature, owing amendment made in Finance Act, 2015. In the present case, however, the ld.counsel for the assessee submitted that the same has been filed subsequently, and therefore, the above decision of the Hon'ble Juri ictional High Court is squarely applicable.
The relevant portion of the judgment of the Hon'ble High Court at para 6.1 is held as under:
6. The moot aspect thus centres around to the requirement of the availability of the audit report when the assessment was undertaken by the Assessing Officer even though the same may not have been filed alongwith (the return of income. Filing of audit report is held to be substantive requirement but not the mode and stage of filing, which is procedural Once the audit report in Form 12B is filed to be available with the Assessing Officer, before assessment proceedings take place, the requirement of law is satisfied. In that view, the Income Tax Tribunal was not justified in dismissing the appeal of the assessee.
1 The appellant assessee has to be held to be eligible and entitled to exemptions under section 11(1) and 11 (2) of the Act and. the alleged ground of non-filing of audit report alongwith return of income which was at the best procedural omission, could never to an impediment in law in claiming the exemption.
On the other hand, the ld.DR relied on the order of the ld.CIT(A).
Heard both the parties.
I have gone through the record and the orders of the Revenue authorities. Keeping in view the decision of the Hon’ble juri ictional High Court in the case of Association of Indian Panel Board Manufactureres (supra), and the assessee having satisfied the requirement of the law, I set aside the impugned orders of the Revenue authorities, and allow the grounds of appeal.”
The ITAT Ahmedabad in this case has held that delay in submission of Form No. 10B is a procedural defect and once the said Form has been Shree Vardhman Stanakvasi Jain Shravak Trust vs. ITO Asst.Year –2020-21 - 7–
filed during the course of hearing, no disallowance is called for on account of late / delayed filing of Form No. 10B. In the instant case, we observe that the assessee had filed Form No. 10B before Ld. JCIT(A) before conclusion of appellate proceedings. Accordingly, in view of the aforesaid decision of Ahmedabad Tribunal, exemption under Sections 11&12 of the Act cannot be denied to the assessee only on account of late filing of Form
No. 10B. Accordingly, in light of the above observations, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
This Order is pronounced in the Open Court on 14/02/2025 (DR. BRR KUMAR)
JUDICIAL MEMBER
Ahmedabad; Dated 14/02/2025
TANMAY, Sr. PSआदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to :
1. अपीलाथŎ / The Appellant
2. ŮȑथŎ / The Respondent.
3. संबंिधत आयकर आयुƅ / Concerned CIT
4. आयकर आयुƅ(अपील) / The CIT(A)-
5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाडŊ फाईल / Guard file.
आदेशानुसार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt.