SHREE HANUMAN SEVA MANDAL,MUMBAI vs. ITO 23(3)(3), MUMBAI

Shri Dilip Sathe appearing on behalf of the assessee submitted that the assessee is a Public Trust. The only issue involved in the present appeal is disallowance of deduction Rs.5,42,208/- claimed under section 11(1)(a) of the Income Tax Act, 1961 (in short ‘the Act’). The assessee filed its return of income declaring total income of Rs.6,99,310/- after claiming deduction of Rs.5,42,209/- under section 11(1)(a) of the Act. The return of the assessee was processed under section 143(1) of the Act vide order dated 15/5/2017. The aforesaid claim of assessee was disallowed. Thereafter, the assessee filed rectification petition under section 154 of the Act. The rectification petition filed by the assessee was rejected vide order 6/10/2017. The ld. Authorised Representative pointed that while filing return of income for the impugned assessment year, the amount of exemption claimed u/s11(1)(a) i.e. to the extent of 15% of aggregate income was inadvertently mentioned in column 9(iv) of Part B, instead of 9(v). It was a clerical mistake that could have been rectified u/s 154 of the Act. The assessee, thereafter, filed appeal before the CIT(A). The CIT(A) rejected the claim of the assessee only on the ground that the assessee has not exercised its option while filing return of income under section 139(1). The ld. Authorized Representative of the assessee submitted that in so far as the activities of the assessee are concerned they are not in dispute. The assessee in the computation of income filed alongwith the return of income has categorically about 15% exemption claim. The ld. Authorized Representative of the assessee placed reliance on the decision of Tribunal in the case of Seth Walchand Hirachnad Memorial Trust vs. ITO (Exemptions) in for assessment year 2010-11 decided on 29/03/2017 to contented that the assessee is eligible for 15% exemption.

On the other hand, Shri Sushil Kumar Mishra representing the department vehemently defended the impugned order and prayed for dismissing the appeal of the assessee. The ld. Departmental Representative submitted that a bare perusal of clause -2 of Explanation to section 11(1) would show that the assessee must exercise his option for availing the benefit of deduction in the return of income.

Both sides heard, orders of authorities below perused. The solitary issue in the present appeal by the assessee is against the disallowance of assessee’s claim u/s.11(1)(a) of the Act of accumulation of 15% gross profit. The assessee’s claim has been disallowed for the reason that the assessee has not claimed the amount of accumulation of profits while filing return of income. A perusal of copy of Income Tax Return for AY 2016-17 would show that the assessee in his Return of income Part B column 9(iv) has mentioned the amount of Rs.5,42,208/-. The aforesaid amount claimed under section 11(1)(a) should have been mentioned under column 9(v). The assessee in his statement of income filed along with the return has also mentioned about 15% exemption with the similar amount. Thus, the assessee claimed the amount u/11(1) in the return of income but at wrong place. This is a rectifiable clerical mistake. I find merit in the submissions of the assessee. The Assessing Officer is directed to consider assessee’s claim of deduction u/s 11(1)(a) of the Act and allow the same, in accordance with law.